CITATION: Meridian Credit Union Limited v. Rymer, 2019 ONSC 3612

COURT FILE NOS.: 11678/17, 11679/17, 11680/17 & 11991/18

DATE: 2019/06/11

ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO. 11678/17

BETWEEN:

Meridian Credit Union Limited

Plaintiff

– and –

Rymer Bros. Limited and Roy Rymer

Defendants

J. Ross Macfarlane, for the Plaintiff

Adam J. Stewart, for the Defendants

AND BETWEEN:

Rymer Bros. Limited and Roy Rymer

Adam J. Stewart, for the Plaintiffs by Counterclaim

Plaintiffs by Counterclaim

-and-

Meridian Credit Union Limited and

Anthony Rufrano

Defendants by Counterclaim

J. Ross Macfarlane, for Defendant by Counterclaim Meridian Credit Union

Jeff Warwick, for Defendant by Counterclaim Anthony Rufrano

HEARD AT WELLAND, ONTARIO: June 6, 2019

ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 11679/17

COURT FILE NO.: 11679/17

BETWEEN:

Meridian Credit Union Limited

Plaintiff

– and –

Niagara Composites International Inc.

Defendant

J. Ross Macfarlane, for the Plaintiff

Adam J. Stewart, for the Defendant

AND BETWEEN:

Niagara Composites International Inc.

Adam J. Stewart, for the Plaintiff by Counterclaim

Plaintiff by Counterclaim

-and-

Meridian Credit Union Limited and

Anthony Rufrano

Defendants by Counterclaim

J. Ross Macfarlane, for Defendant by Counterclaim Meridian Credit Union Limited

Jeff Warwick, for Defendant by Counterclaim Anthony Rufrano

HEARD AT WELLAND, ONTARIO: June 6, 2019

ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 11680/17

BETWEEN:

Meridian Credit Union Limited

Plaintiff

– and –

Progressive Machinery Inc., and Roy Rymer

Defendants

J. Ross Macfarlane, for the Plaintiff

Adam J. Stewart, for the Defendants

AND BETWEEN:

Progressive Machinery Inc., and Roy Rymer

Adam J. Stewart, for the Plaintiffs by Counterclaim

Plaintiffs by Counterclaim

-and-

Meridian Credit Union Limited and

Anthony Rufrano, Kyle Rufrano, 2391637 Ontario Incorporated, and 2236948 Ontario Incorporated

Defendants by Counterclaim

J. Ross Macfarlane, for Defendant by Counterclaim Meridian Credit Union Limited

Jeff Warwick, for Defendants by Counterclaim Anthony Rufrano, Kyle Rufrano, 2391637 Ontario Incorporated, and 2236948 Ontario Incorporated

HEARD AT WELLAND, ONTARIO: June 6, 2019

ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 11991/18

BETWEEN:

Meridian Credit Union Limited

Plaintiff

– and –

Blu-Rabbit Ltd. and Roy Rymer

Defendants

J. Ross Macfarlane, for the Plaintiff

Adam J. Stewart, for the Defendants

AND BETWEEN:

Blu-Rabbit Ltd. and Roy Rymer

Adam J. Stewart, for the Plaintiffs by Counterclaim

Plaintiffs by Counterclaim

-and-

Meridian Credit Union Limited and

Anthony Rufrano

Defendants by Counterclaim

J. Ross Macfarlane, for Defendant by Counterclaim Meridian Credit Union Limited

Jeff Warwick, for Defendant by Counterclaim Anthony Rufrano

HEARD AT WELLAND, ONTARIO: June 6, 2019

The Honourable Justice D.L. Edwards

REASONS FOR DECISION ON SUMMARY JUDGMENT MOTION

1The plaintiff brings four summary judgment motions, relating to its actions against Roy Rymer and his four companies namely:

Niagara Composites International Inc.

Rymer Bros. Limited

Progressive Machinery Inc.

Blu-Rabbit Ltd. (collectively, “Rymer Companies”)

2The plaintiff seeks summary judgment against those defendants in those four actions and a dismissal of the counterclaims brought by those defendants.

3Mr. Rymer and the Rymer Companies defend the motions and submit that there are genuine issues which require a trial.

4For the following reasons, I dismiss the summary judgment motions.

Background

5Roy Rymer is the principal of the Rymer Companies. Darrell Kemp was a friend of Rymer and an insurance agent. In 2014 and until September 21, 2015, Anthony Rufrano was an employee of the plaintiff, Meridian Credit Union Limited (“Meridian”).

6In 2014 Rymer, Kemp and Rufrano discussed the possibility of Meridian providing banking services to Rymer and some or all of his companies.

7There is a disagreement in the evidence on the extent of the proposed involvement by Meridian as Rymer’s banker.

8Rymer and Kemp’s evidence is that Rufrano proposed that there be a total restructuring of Rymer’s financial affairs with Meridian assuming the role as banker for Rymer and all of the Rymer Companies’ affairs.

9Rymer and Kemp’s evidence is that Rufrano advised them that a whole life insurance policy on the life of Roy Rymer could act as security for these loans, in addition to the other normal security. Their evidence is that Rufrano advised them to obtain a policy in the amount of $2,800,000, and that Rufrano understood that Rymer did not have the ability to pay the monthly premium, unless the restructuring was put in place, as this would provide the funds for those payments.

10Rymer and Kemp’s evidence is that, based upon the assurances of Rufrano that the restructuring would be put in place, an insurance policy was purchased in October 2014, and that this policy was subsequently amended to $2,500,000 based upon advice from Rufrano.

11Rymer and Kemp’s evidence is that Rufrano advised them that there would be $600,000 of equity available to Rymer to assist with the premiums for the policy and other financial needs.

12Rymer and Kemp’s evidence is that they approached Rufrano to confirm the timing of the refinancing and at Rufrano’s request the closing was extended to December, as Rufrano needed more documentation.

13Kemp’s evidence is that he gave the original insurance policy to Rufrano so that Meridian could retain it as security. Rufrano denied this and Meridian’s records did not disclose the policy.

14Two lines of credit of $100,000 each were eventually put in place, one for Rymer Bros. Limited and one for Progressive Machinery Inc. They have been fully advanced. The Rymer Bros. Limited line of credit was opened March 2015 and the funds were used to pay the monthly insurance policy premium. The Progressive Machinery Inc. line of credit was opened May 2015 and the funds were advanced to the company for it to purchase equipment.

15From November 2014 until October 2015 Rymer paid the monthly premiums of $15,337.71 from the line of credit established for Rymer Bros. Limited. Thereafter the policy lapsed.

16The evidence of Kemp and Rymer is that Rufrano advised them in May 2015 that the lawyers were working on the refinancing documents and it would be completed “pretty soon”.

17Rufrano’s evidence supports some of the allegations of Rymer. He agreed that he spoke with Rymer and Kemp about a corporate refinancing and restructuring, and that he agreed that Meridian could have used the insurance policy as part of the corporate restructuring.

18Rufrano’s evidence is that he never agreed that Meridian would provide a complete restructuring of the Rymer Companies financing.

19Rufrano denied that he told Rymer and Kemp that Meridian’s lawyers were working on it, but there is an email from him dated May 11, 2015 advising that he would be following up with the lawyers to determine the status of the file.

20The refinancing never occurred.

21Due to a complaint from another member of Meridian, Meridian determined that Rufrano had committed several fraudulent acts. Rufrano was charged by the Niagara Regional Police with a number of fraud-related crimes. Rufrano resigned from Meridian September 21, 2015.

22The investigation revealed several transactions in the Rymer Companies’ accounts that Rymer said were unauthorized. Meridian has reversed any alleged fraudulent transactions in Rymer Companies’ accounts together with interest, if appropriate. The investigation also revealed doctored emails which Rufrano sent to his clearing area to cause various unauthorized transactions to occur. Rufrano’s evidence was that Rymer authorized all of these transactions.

23On October 28, 2015 Rymer met with Patrick McCann, counsel for Meridian about their investigation of Rufrano. It would appear that Rufrano forged Rymer’s signature upon financing documents for Blu-Rabbit Ltd.

24Rufrano’s evidence that the transaction between Blu-Rabbit Ltd. and 240476 Ontario Limited (Petro Canada) was a private loan that he arranged and was authorized by Rymer. Rymer denies this and denies ever signing any documentation related to Blu-Rabbit Ltd.

25There is evidence that Rufrano’s various fraudulent actions were contrary to Meridian’s policies and guidelines, and that its internal safeguards did not catch the fraud; rather the investigation began because of a complaint from another member of Meridian.

The Law

26There is no issue as to what the test for granting summary judgment is. Hyrniak, the Rules of Civil Procedure and cases after Hyrniak make it very clear.

27I must grant summary judgment if I am satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. There is no genuine issue requiring a trial when I am able to reach a fair and just determination of the merits of the motion for summary judgment.

28This will be true when the process allows me to make the necessary findings of fact, to apply the law to those facts, and the process is a proportionate more expeditious and less expensive means to achieve a just result.

29As noted in Hyrniak, I should first determine if there is a genuine issue requiring a trial based only on the evidence before me, solely on the written record filed and without using the fact-finding powers permitted in Rule 20.04(2.1).

30If there appears to be a genuine issue requiring a trial, I should then determine if the need for trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). I may at my discretion use those powers provided that their use is not against the interests of justice.

31In determining whether there is a genuine issue requiring a trial, Rule 20.04(2.1) grants me the power to weigh evidence, evaluate the credibility of deponents and draw any reasonable inference from the evidence.

32I also have the power to order that oral evidence be presented by one or more parties. (Rule 20.40(2.2))

33I would also refer to Rule 1.04 which requires that the rules be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

Parties’ Positions

34The plaintiff asserts that this is a simple collection matter. There are two lines of credit which have been advanced and used for the benefit of the debtors, as well as an overdraft, also used for the benefit of that debtor. The plaintiff submits that demand has been made; the payment has not been made; therefore, summary judgment should be granted.

35With respect to the counterclaim, the plaintiff submits that it is frivolous and vexatious, and statute barred by the limitation period.

36The defendants submit that to view this matter as a simple collection matter is to view it too restrictively. They assert that they relied upon Rufrano, who was a senior employee of the plaintiff, and who assured them many times that a corporate restructuring and refinancing would occur. Relying upon those various assurances a life insurance policy was obtained, and significant costs incurred. Further the corporate refinancing, which was to release approximately $600,000 dollars of equity was never finalized.

37The defendant submits that there are clear contradictions in the evidence, particularly as between Rufrano and Rymer and Kemp, which will require significant findings of credibility, which they assert will be fundamental to the determination of this matter.

38They assert that the matter is not statute barred as the Statement of Defence and Counterclaim was issued September 26, 2017 and the defendants did not learn of their damages until after a meeting in October 2015.

Analysis

39Clearly the parties disagree whether this is a proper case for the matter to be decided by way of summary judgment.

40After a review of the evidence without using the fact-finding powers permitted in Rule 20.04(2.1), I am satisfied that there is a genuine issue requiring a trial. After employing those special fact-finding powers, I am satisfied that there is a genuine issue requiring a trial.

41Given the factual matrix, I do not believe that one should analyze this strictly as a standard collection matter and look only to the terms of the various agreements which contain many exculpatory provisions regarding any liability of the defendant by counterclaim and inculpatory provisions regarding the defendants to the main action.

42Fundamental to a determination of this matter will be findings of fact regarding the relationship between Rymer and Rufrano, and whether it was something other than the typical banker customer relationship. The evidence of Rymer and Kemp points to Rufrano acting as a financial advisor, rather than simply a banker. Their evidence supports the position that the defendants relied upon those representations, including purchasing a very expensive life insurance policy, which ultimately lapsed. Further, Rymer’s evidence is that because of Rufrano’s advice and his reliance thereon, he signed any documents that Rufrano produced and did so without reading.

43Rufrano’s evidence is somewhat supportive of Rymer’s position, but contradictory in important aspects.

44The actions of Rufrano in undertaking unauthorized transactions and doctoring various emails causes me some concern as to his credibility, but I am of the opinion that the interest of justice would be best served by the trier of fact hearing oral evidence to assist in making credibility findings and the findings of fact that would follow.

45The findings of credibility on this issue will be pivotal to the outcome of this case and the materials filed do not allow me to make those findings. I am of the view that this is not an appropriate case to base those findings of fact solely upon the affidavits and cross examinations thereon.

46With respect to the limitation defence to the counterclaim, I note that the Statement of Defence and Counterclaim was first issued September 26, 2017. Based upon the evidence before me, I do not agree that the plaintiff has established that the limitation period should begin at the latest on the date of Rufrano’s resignation from Meridian. Without a better understanding of the evidence, and particularly what transpired when Rymer met Patrick McCann on October 28, 2015, it is unclear to me whether the limitation period began to run at that point, or earlier.

47This is also a genuine issue requiring a trial.

Summary

48For the foregoing reasons, I dismiss the plaintiff’s four summary judgment motions.

49If the parties cannot agree upon costs, the defendant shall serve and file his costs submissions within seven days; the plaintiff shall serve and file their costs submissions within five days thereafter and a reply, if any, within three days. Costs submission shall be limited to three pages.