Court File and Parties
Court File No.: CV-18-00602763-0000 Date: 2019-06-10 Ontario Superior Court of Justice
Between: RONALD KENTNER and MAUREEN KENTNER, Plaintiffs/Moving Parties – and – MARINA STEFANOVIC, Defendant/Responding Party
Counsel: Adrienne Boudreau and Jonathan Schachter, for the Plaintiffs/Moving Parties Catherine Francis, for the Defendant/Responding Party
And Between: MARINA STEFANOVIC, Plaintiff by Counterclaim – and – RONALD KENTNER, MAUREEN KENTNER, AMANDA RIX, HOMEWARD INC. operating as REAL ESTATE HOMEWARD, VIRAJ TANNA and ROYAL LEPAGE INC. operating as ROYAL LEPAGE SIGNATURE REALTY, Defendants to the Counterclaim
Heard: March 8, 2019
Justice S. NAKATSURU
Endorsement
[1] Ronald and Maureen Kentner are husband and wife (the “Kentners”). They have owned a house at 379 Huron Street, Toronto, Ontario (henceforth the “Property”) for a number of years. In 2017, the Kentners decided to sell their home. They retained Ms. Amanda Rix of Real Estate Homeward Brokerage to sell their home. Ms. Rix had been referred to them by the Kentners’ daughter. They met Ms. Rix for the first time about three weeks before their home was listed.
[2] Maria Stefanovic is a lawyer with the Department of Justice. She also has invested in real estate. After the Kentners retained Ms. Rix, Ms. Stefanovic approached Ms. Rix about the Property. Ms. Rix agreed to represent both the Kentners and Ms. Stefanovic in the sale. The Property was listed and on May 8, 2017, multiple offers were presented. Ms. Stefanovic made an offer of $3,105,000 with a closing date of September 25, 2017. The three highest bidders which included Ms. Stefanovic, were invited to re-present their offers. Ms. Stefanovic re-presented an offer of $3,206,000 with a closing of July 31, 2017. This was accepted by the Kentners. All parties signed an Agreement of Purchase and Sale. It was firm and unconditional.
[3] Three days before the closing date, the Kentners’ lawyer learned that Ms. Stefanovic was having difficulty securing financing to close. Unbeknownst to the Kentners, Ms. Stefanovic had planned to use funds from the sale of one of her other properties to complete the purchase but the other sale did not close. In the meantime, the Kentners had purchased another property and had put down a deposit. Through counsel, Ms. Stefanovic represented that she could still sell another of her properties and that she could pay any balance within 30 days. Relying on this, the Kentners agreed to accept a short-term vendor take-back mortgage (henceforth the “Mortgage”) as essentially bridge financing to Ms. Stefanovic until her other property sale could close.
[4] This Mortgage (instrument AT4642288) was registered on the Property. It was due August 31, 2017. It was for $1,705,966.58 plus interest. There were standard charge terms.
[5] Ms. Stefanovic defaulted on the Mortgage. She did not make any payments. Instead, her lawyer asked for an extension of time to pay the balance. Ms. Stefanovic stated that she was in the process of listing some of her properties. Once sold, she could pay the balance of the Mortgage. The Kentners agreed to extend to September 30, 2017. Ms. Stefanovic paid the Kentners $10,000 in compensation for the default pursuant to the terms of the Mortgage. Ms. Stefanovic failed to pay the balance on the second due date.
[6] On August 3, 2018, the Kentners brought an action for the possession of the Property and judgment for the principal and interest on the Mortgage. Ms. Stefanovic served and filed a Statement of Defence acting on her own behalf.
[7] The Kentners now move for summary judgment.
[8] As a matter of procedural history, this motion was originally scheduled to be heard on January 31, 2019. At that time, Ms. Stefanovic moved to adjourn the motion. Up to that time, Ms. Stefanovic had been representing herself. For the January 31, 2019 motion date, she had retained counsel who would only act if the motion was adjourned. Counsel for Ms. Stefanovic requested an opportunity to amend the pleadings, conduct examinations, and file a factum. The Kentners opposed. I granted that adjournment. I permitted Ms. Stefanovic to serve and file an Amended Statement of Defence.
[9] On February 1, 2019, Ms. Stefanovic issued a Fresh as Amended Statement of Defence and Counterclaim. In that Counterclaim, Ms. Stefanovic has sued the Kentners, Ms. Rix, Homeward Inc., Viraj Tanna, and Royal LePage Inc.
[10] In the Counterclaim, Ms. Stefanovic claims that the Defendants to the Counterclaim wrongfully and grossly inflated the purchase price of the Property. As both the listing agent and Ms. Stefanovic’s agent, it is alleged that Ms. Rix acted as a double “dual agent” on the sale of the Property. Ms. Rix also was acting as an agent for another competing buyer for the Property. Ms. Rix did not disclose this to Ms. Stefanovic. It is pleaded that Ms. Rix induced her buyers to submit competing offers far above the market value, getting them to try and outbid each other without disclosing that she controlled both offers. Mr. Viraj Tanna was a fellow real estate agent who Ms. Rix had appointed to present Ms. Stefanovic’s offer on the offer night. It is alleged that Mr. Tanna was a “straw man.” It is alleged that Ms. Rix breached her fiduciary duties owed to Ms. Stefanovic. It is alleged that Ms. Rix acted in this scheme for her own interest and for the benefit of the Kentners who knew and consented to it.
A. Test for Summary Judgment
[11] Pursuant to Rule 20 of the Rules of Civil Procedure, 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.
[12] In 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.
[13] Determination 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.
[14] The onus is on the Kentners to satisfy me that summary judgment is appropriate. Ms. Stefanovic mainly opposes this motion on the basis that the Kentners are only seeking partial summary judgment. Success on their motion would still leave the Counterclaim. As such, Ms. Stefanovic submits that the motion should be dismissed.
[15] Partial summary judgment is not readily granted. Recently, in Mason v. Perras Mongenais, 2018 ONCA 978 Nordheimer J.A. emphasized this. A motion for partial summary judgment should be a rare procedure that is reserved for an issue that may be readily bifurcated from those in the main action. Partial summary judgment remains the exception, not the rule.
[16] Some of the considerations in determining whether partial summary judgment should be granted were considered in Butera v. Chown, 2017 ONCA 783 at paras. 29 to 35:
The caution expressed pre- Hryniak in Corchis is equally applicable in the post- Hryniak world. In addition to the danger of duplicative or inconsistent findings considered in Baywood and CIBC, partial summary judgment raises further problems that are anathema to the stated objectives underlying Hryniak.
First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is also always the possibility of an appeal.
Second, a motion for partial summary judgment may by very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing partial summary judgment motions.
Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.
Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial therefore increasing the danger of inconsistent findings.
When bringing a motion for partial summary judgment, the moving party should consider these factors in assessing whether the motion is advisable in the context of the litigation as a whole. A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner. Such an approach is consistent with the objectives described by the Supreme Court of Canada in Hryniak and with the direction that the Rules be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
Lastly, I would observe the obvious, namely, that a motion for partial summary judgment differs from a motion for summary judgment. If the latter is granted, subject to appeals, it results in the disposal of the entire action. In addition, to the extent the motion judge considers it advisable, if the motion for summary judgment is not granted but is successful in part, partial summary judgment may be ordered in that context.
B. Analysis
[17] An issue was raised on the motion regarding the legality of the interest rate in the Mortgage. At the hearing, the parties agreed to an interest rate of 5%. The interest rate issue is no longer an impediment to granting summary judgment.
[18] I find the following on this partial summary judgment motion:
- There is no genuine issue requiring trial regarding the validity and the enforceability of the Mortgage and its default.
- If required, I have used my expanded fact-finding powers and find by weighing evidence, evaluating credibility, and drawing inferences, it is in the interests of justice to grant summary judgment.
- This is a discrete and readily bifurcated issue from the Counterclaim such that partial summary judgment is appropriate.
[19] Ms. Stefanovic had retained a lawyer to deal with the Mortgage. When I look at the whole of the record, there is no issue that this is a valid and enforceable contract. Ms. Stefanovic in her cross-examination, despite quibbling over admitting this undeniable fact, admitted as much. It is also undeniable that the terms and conditions of the Mortgage have not been fulfilled. They remain unfulfilled. In short, Ms. Stefanovic has defaulted and continues to do so.
[20] There is no factual or legal basis to rescind or find the Mortgage unconscionable. Indeed, I find there was nothing in the submissions or evidence that queries the appropriateness of granting judgment in favour of the Kentners.
[21] The main attack of Ms. Stefanovic is against the breach of Ms. Rix’s fiduciary duty towards her. It is claimed that she did not make full disclosure. It is claimed that Ms. Rix did not obtain Ms. Stefanovic’s permission to act for another potential buyer or advise her of this. It is claimed that Ms. Rix did not act in Ms. Stefanovic’s interest but against her interest. By acting as a double “dual agent” and by having Ms. Stefanovic and Ms. Rix’s other buyer playing off of each other, Ms. Rix induced Ms. Stefanovic to submit an offer that was substantially above market value without any consideration of the duties she owed Ms. Stefanovic. Ms. Stefanovic alleges that the Kentners knew and participated in Ms. Rix’s actions.
[22] This Defence/Counterclaim poses no genuine issue requiring a trial when it comes to the Mortgage. The issue of whether Ms. Rix breached her contractual and fiduciary obligations does not affect the validity of the Mortgage. Indeed, I query whether it even affects the validity of the Agreement of Purchase and Sale. However, that is not necessary for me to decide on this motion.
[23] In the Fresh as Amended Statement of Defence and Counterclaim, Ms. Stefanovic pleads that the Kentners knew and participated in this scheme of Ms. Rix. Again, it is my view, that even if they did, this does not affect the Mortgage. It is a separate and discrete issue. The fact they may have even conspired with Ms. Rix, does not affect the validity of this separate binding legal contract. That issue can be readily bifurcated from the issue regarding the Mortgage.
[24] I will go further. Even if I am wrong that that the issues raised by Ms. Stefanovic does not affect the validity of the Mortgage, I find, based upon the evidence at this summary judgment motion, I can use my expanded fact-finding powers and come to a decision that will not be against the interest of justice given their use 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. If the credibility of the witnesses is an issue that requires a trial, then I am prepared to make those credibility findings. I am certain in making them.
[25] Looking at the affidavit evidence and cross-examinations, I am confident that there is nothing to the allegation made by Ms. Stefanovic that the Kentners were in on any of the alleged impugned conduct of Ms. Rix or Mr. Tanna.
[26] Mr. Ronald Kentner swore two affidavits. Specifically, in his affidavit of February 4, 2019, Mr. Kentner averred he had nothing to do with the allegations being made by Ms. Stefanovic. He averred that neither he nor his wife ever entered into an agreement or arrangement with Ms. Rix and/or Mr. Tanna to artificially inflate the sale price of the Property or to induce an artificial bidding war. Mr. Kentner swore he had nothing to do with any alleged attempt to manipulate or influence the offers or to improperly instruct the agents regarding their dealings with Ms. Stefanovic. Mr. Kentner averred that all the renovations were performed according to law, were inspected, and there were no latent defects in the Property to his knowledge [1].
[27] Mr. Kentner was cross-examined. He testified that he had no conversations with Ms. Stefanovic. He had no evidence to give about what Ms. Rix told or did not tell Ms. Stefanovic. The information Mr. Kentner received from Ms. Rix about her dual representation with Ms. Stefanovic was standard and nothing out of the ordinary. He testified that Ms. Rix told him through an email on May 6, 2017, that she had another client who would also be making an offer but that was about all he knew. There was nothing in his relationship with Ms. Rix that could support the Defendant’s allegations. He related what happened on the busy evening when the offers were presented.
[28] Even though it is only given by way of written evidence, I find Mr. Kentner’s evidence was credible and reliable. His evidence was unimpeached. Indeed, it was not really challenged. It was plausible. It was consistent. It was straightforward.
[29] Ms. Stefanovic points to the email dated May 6, 2017, from Ms. Rix to the Kentners as evidence of the Kentners’ knowledge and participation in the alleged conspiracy or improper scheme. I will not go through this email. I have reviewed it carefully. This interpretation given to the email by Ms. Stefanovic is unreasonable. I do not interpret it in this fashion. Indeed, from it Ms. Rix is most transparent about this other offer she is bringing to the table. Ms. Rix emphasizes her ethical obligations. The advice and encouragement that she gives the Kentners is innocuous and something one would normally expect from one’s real estate agent. Regardless of what it might say about Ms. Rix’s obligations to Ms. Stefanovic, there is nothing in the email that could support the kind of allegations being levelled against the Kentners. Thus, I remain convinced of the evidence given by Mr. Kentner.
[30] In Ms. Stefanvic’s affidavit and cross-examination, she had no evidence to the contrary that the Kentners were in on this alleged scheme. That is to be expected. She was not present for any interactions between Ms. Rix and the Kentners. While her evidence about what Ms. Rix told her is contested, this does not affect my ability to deal with this motion because the issue on the motion is concerned with not what Ms. Rix did, but what the Kentners knew and did.
[31] Ms. Rix was summoned to give evidence. I appreciate that Ms. Stefanovic did not participate in the examination. That said, each party is expected to lead trump. No further evidence is to be considered on this motion.
[32] Ms. Rix gave evidence how she first became a listing agent for the Kentners. Ms. Stefanovic had seen the Property for sale. She asked Ms. Rix to be her agent as well. Ms. Stefanovic explained that this was her practice. Ms. Rix explained the protocol and the document used when she is doing multiple representations and had Ms. Stefanovic and the Kentners sign it. She also let the agents who had registered and offered know this. She prepared Ms. Stefanovic’s offer but in accordance with her standard practice, she had Mr. Tanna present the offer. Mr. Tanna worked for another agency. Ms. Rix explained that since she is with the sellers, having another agent present her buyer’s offer would be fairer to the other agents and their buyers who present offers. She lets the other agents know this of as well.
[33] Ms. Rix volunteered during her examination that she had another agent doing this for another offer that was placed on the Kentner’s Property. These clients had come in with an offer that was higher than Ms. Stefanovic’s original offer. They had offered $3.124 million and were accepting all the tenants who lived in the Property. Ms. Rix was going to sell another property for these clients. Ms. Rix testified that she would have gained more if they were the successful bidder rather than Ms. Stefanovic.
[34] Ms. Rix described the offer process. There were eleven agents outside the Property on the night in question to make offers. Ms. Stefanovic was the third offer in terms of price. The first offer (not Ms. Rix’s other client) was not accepted as the purchaser wanted to illegally evict the tenants. Ms. Rix’s other client had a higher offer and a better closing date than Ms. Stefanovic’s offer of $3.105 million and a September closing date. Ms. Rix told Mr. Tanna to advise Ms. Stefanovic that hers was not the highest offer. The other agents were told the same. Ms. Stefanovic came into the house to present a higher offer and an earlier closing date that the Kentners wanted, July 31st. Ms. Rix testified that Ms. Stefanovic was under no different pressure than the other potential purchasers. Ms. Stefanovic offer was accepted based upon the closing, July 31st, and the price, $3.206 million. Neither the Kentners nor Ms. Rix pressured Ms. Stefanovic. It was her choice to make a higher offer and a shorter closing. Ms. Rix testified that Ms. Stefanovic, far from being reluctant to buy the Property, was eager and willing.
[35] Ms. Rix was not involved in helping Ms. Stefanovic get financing for the purchase. She was not involved in the Mortgage. Ms. Stefanovic did not tell Ms. Rix that she needed to sell another property to help finance the purchase. Ms. Stefanovic had said her financing was in place. It was only on the day of the closing that Ms. Stefanovic called Ms. Rix to advise that she did not have her financing in place. Ms. Rix told her to immediately call her lawyer. Ms. Rix testified that had she known this was the case, she would have advised Ms. Stefanovic to have a financing condition in her offer and to have retained another agent. This was her standard practice.
[36] When I look at the examination of Ms. Rix for this motion, I find that there is nothing in Ms. Rix’s evidence that supports any allegation that she was inappropriately involved in a scheme to create a bidding war using her clients to artificially inflate the purchase price. While Ms. Stefanovic’s evidence may support her belief there was some sort of scheme or a conflict of interest on the part of Ms. Rix, this is a triable issue between her and Ms. Rix and the brokerage. It does not touch the Kentners. It does not touch the validity of the Mortgage.
[37] In conclusion, I find the Kentners did not participate in any alleged improper conduct of Ms. Rix. Thus, this case is distinguishable from the authority relied upon by Ms. Stefanovic: Raso v. Dionigi (1993), 12 O.R. (3d) 580 (C.A.).
[38] Because of the legally and factually discrete nature of the Mortgage claim, I see no danger of duplicative or inconsistent findings. I find the issue is readily bifurcated and can be dealt with in a cost effective manner.
[39] Looking at the other factors set out in Butera v. Chown, they support the granting of partial summary judgment. There is no concern about delay. The Counterclaim was raised after the summary judgment motion was brought. No statement of defence to the Counterclaim has yet been issued. Granting summary judgment on the Mortgage will not delay the Counterclaim. It is more likely to expedite it.
[40] To grant it involves no more costs. This case is unique in the sense that this issue of partial summary judgment was only raised when Ms. Stefanovic was permitted to adjourn the original hearing date and amend her pleadings. Nearly all of the costs had already been incurred by then.
[41] Given the rather unique circumstances of this case, I do not see granting partial summary judgment here would increase the burden on judges or encourage litigants to bring more partial summary judgments.
[42] Finally, I do not see how a trial record would be any more expansive or better than what was before me. I have been able to make the key findings readily and with certainty.
[43] I find Ms. Stefanovic’s claim for a potential set-off is no impediment to partial summary judgment. Of course, the set-off would depend on the Ms. Stefanovic’s success in her Counterclaim against the Kentners. But even beyond that, the Kentners have been very patient in seeking what is rightfully owed to them. I must point out that the Kentners gave Ms. Stefanovic the Mortgage when she did not have the financing available to buy the house. They did not have to do it. But they did to Ms. Stefanovic’s benefit. When Ms. Stefanovic was unable to sell her property(s) and could not pay them back on time given the bridge financing nature of the Mortgage, the Kentners extended the deadline. They did not have to. But they did to Ms. Stefanovic’s benefit.
[44] The Kentners should not have to wait until the Counterclaim is determined before they can get the monies owed to them. If by chance, Ms. Stefanovic can get judgment against the Kentners in the Counterclaim, she will be entitled to enforce judgment against them. There is no reason to believe that she will not be able to.
[45] The Counterclaim will continue. The Kentners have not moved to dismiss the Counterclaim at this point. It will not come as no surprise from my reasons about what I think about the success any Counterclaim against the Kentners. That said, I find it unnecessary to say more than this dispute in the Counterclaim has little or nothing to do with the Kentners’ enforcement of the Mortgage: New Haven Mortgage Corp. v. Delson, 2019 ONCA 102 at para. 2. The facts of this case are such that the claim can readily be bifurcated from the Counterclaim. This case does not present a complex situation as in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 that makes partial summary judgment inappropriate in light of the fact that the Counterclaim will continue to trial.
[46] I find the granting of partial summary judgment here is similar to the path taken by the Ontario Court of Appeal in 1853491 Ontario Inc. v. Regional Waste North Inc., 2018 ONCA 37 at paras. 18-19. In that case, the court struck a counterclaim on a limitation period defence but permitted the main action to continue. I appreciate I have done the reverse in the case at bar. However, similar to the reasons given in that case, partial summary judgment is appropriate because although some of the same factual matrix will likely be raised in the Counterclaim, partial summary judgment will finally resolve the issue of the validity and enforceability of the Mortgage and result in the savings of costs and trial time in the Counterclaim.
[47] That approach was again taken in Miller v. Wang, 2018 ONSC 7668 where McKelvey J. granted partial summary judgment to the plaintiff vendor of a home against the purchaser defendant though the defendant brought a third party claim against the real estate agent on the basis that the agent induced the defendant to make an offer. McKelvey J. held that although the claims arose out of the same transaction, the claims were sufficiently distinct that there did not appear to be a risk of inconsistent findings.
[48] Thus, summary judgment is granted. Ms. Stefanovic has paid the Plaintiffs the penalty of $10,000 on September 1, 2017, and $250,000 on a without prejudice basis on December 31, 2018. These amounts have been taken into account by me in my judgment.
[49] I make the following orders:
- The Defendant shall forthwith deliver to the Plaintiffs possession of the Property or such part thereof as may be in her possession;
- The Defendant shall pay the Plaintiffs the sum of $1,584,678.41 as being the amount owing as of March 8, 2019, on account of principal and interest under a mortgage registered on title to the Property as instrument AT4642288 on July 31, 2017.
- Interest on this judgment at 5% per year commencing on March 8, 2019.
[50] If the issues of costs cannot be resolved between the parties, I will entertain written submissions, each one limited to two pages excluding any attachments (any Bill of Costs, Costs Outline, and authorities). The Plaintiffs shall file within 20 days of the release of these reasons. The Defendant shall file within 10 days thereafter. There will be no reply submissions without leave of the court.
Footnote:
[1] Ms. Stefanovic has briefly raised the issue of latent defects. This was only noted in the factum. It was not pursued in oral submissions. I find that there is no issue requiring trial based on this bald assertion without any evidentiary support.
Justice S. Nakatsuru Released: June 7, 2019
Court File No.: CV-18-00602763-0000 Date: 2019-06-10 Ontario Superior Court of Justice
Between: RONALD KENTNER and MAUREEN KENTNER, Plaintiffs/Moving Parties – and – MARINA STEFANOVIC, Defendant/Responding Party And Between: MARINA STEFANOVIC, Plaintiff by Counterclaim – and – RONALD KENTNER, MAUREEN KENTNER, AMANDA RIX, HOMEWARD INC. operating as REAL ESTATE HOMEWARD, VIRAJ TANNA and ROYAL LEPAGE INC. operating as ROYAL LEPAGE SIGNATURE REALTY, Defendants to the Counterclaim
Reasons for Judgment