Court File and Parties

COURT FILE NO.: CV-17-589034

DATE: 2019-06-13

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Summerhill Prestige Real Estate Ltd., Plaintiff

AND:

Stephen Politsky, Defendant

AND RE:

Stephen Politsky, Plaintiff by Counterclaim

AND:

Summerhill Prestige Real Estate Ltd. and David Mr. Knox and Dina Ms. Maglietta, Defendants by Counterclaim

BEFORE: Pollak J.

COUNSEL: Marvin J. Huberman, for the Plaintiff David S. Altshuller and Lara Di Genova, for the Defendant Gavin Tighe and Dara Hirbod, for David Mr. Knox and Dina Ms. Maglietta, Defendants by Counterclaim

HEARD: January 18, 2019

ENDORSEMENT

[1] The Plaintiff (and Defendant by Counterclaim), Summerhill Prestige Real Estate Ltd. ("Summerhill"), seeks summary judgment against the Defendant (and Plaintiff by Counterclaim), Stephen Politsky ("Mr. Politsky") in the amount of $187,500.00 for damages for the breach of a Buyer Representation Agreement ("BRA").

[2] Summerhill is a real estate brokerage in Toronto. Mr. Knox and Ms. Maglietta (Defendants by Counterclaim) are agents employed by Summerhill. Ms. Maglietta is the Broker of Record for Summerhill. Mr. Knox and Ms. Maglietta acted for Mr. Politsky in the purchase of commercial and residential properties.

[3] The evidence shows that Mr. Politsky is a sophisticated and experienced investor, who has participated in many real estate transactions.

[4] The BRA, signed by Mr. Politsky on March 13, 2016, provides the Plaintiff Summerhill with exclusive authority to act as Mr. Politsky’s agent in the purchase of real estate from March 11, 2016 to December 31, 2016 and for Summerhill to be paid commission on any purchase of real estate by Mr. Politsky, even if Summerhill does not act as agent on the transaction.

[5] In November 2016 Mr. Politsky entered into an agreement to buy residential property in Toronto. The sale closed on or about December 6, 2016. The Plaintiff claims that as a result of this purchase, pursuant to the BRA, Mr. Politsky was obliged to pay to it a commission of $187,500.00 (2.5% of the $7,500,000.00 sale price), plus applicable taxes. The Plaintiff claims punitive damages as a result of Mr. Politsky’s actions surrounding the purchase.

[6] On this motion for summary judgment, Summerhill, and the personal Defendants by Counterclaim, also move for an Order dismissing the Counterclaim against them.

[7] Summerhill supports and relies on the position taken by Mr. Knox and Ms. Maglietta in their motion for summary judgment for dismissal of Mr. Politsky's Counterclaim against them.

[8] Mr. Politsky’s Counterclaim seeks $750,000.00 in damages against Mr. Knox and Ms. Maglietta personally, and Summerhill on the following grounds:

(a) that the Plaintiff and Defendants by Counterclaim are liable for damages as they have received commission on the sale of Mr. Politsky's Hazelton Condo;

(b) they are legally responsible for damages resulting from a leak occurring in a condo wherein the Plaintiff and Defendants by Counterclaim acted as agents on the purchase of the property; and

(c) that the Plaintiff and Defendants by Counterclaim were negligent and breached Mr. Politsky's trust by "back-dating" the digitally stamped Summerhill BRA expiry date to December 31, 2016, after the fact.

[9] The moving parties on this motion for summary judgment submit that the Counterclaim on the evidentiary record before the Court is frivolous, vexatious, and abusive, and therefore should be dismissed.

[10] Summerhill relies on the BRA, which, it submits, applies to the purchase of any property in the City of Toronto. Mr. Politsky submits that he had always understood and that the parties agreed that the BRA would apply only to specific property on which he was submitting an offer to purchase.

[11] The parties agree that there are two issues on this motion:

(a) whether Mr. Politsky must pay Summerhill a commission of $187,500.00 (being 2.5% of the $7,500,000.00 sale price of the Dunvegan Road Property), plus applicable taxes; and

(b) Whether following his purchase of the Dunvegan Road Property, Mr. Politsky, in breach of his general and independent duty to act honestly in the performance of his contractual obligations to Summerhill, lied to and knowingly misled Summerhill about his purchase of the Dunvegan Road Property and his breach of the BRA, justifying the Plaintiff’s entitlement to an award for punitive damages.

[12] Mr. Politsky submits that there are material disputes in the evidence on key material facts with respect to the BRA’s validity, for example:

(a) Whether the terms of the BRA were explained to him at the time he signed the document;

(b) Whether the December 31, 2016 expiry date was a term of the BRA when he signed it; and

(c) Whether he was given a copy of the BRA after he signed it.

[13] His evidence is that parts of the BRA he signed on March 13, 2016 were blank and that he was told the details would be filled in later. He also assumed those details would reflect the parties’ past dealings and further testified that he would not have signed a BRA with a December 31, 2016 expiry date.

[14] He submits that there was no binding agreement between the parties as there was no "meeting of the minds." The parties did not agree on the fundamental terms of the BRA and there was no intention to enter into a legally binding contract.

[15] A major issue on this motion involves determining whether the parties have reached a valid contract in the BRA. I must consider whether a reasonable person examining all of the facts would conclude that the parties had agreed on the essential terms of the contract with an intent to form a legally binding relationship (Royal LePage Innovators Realty, Brokerage v. Abdullah, 2012 99804). Mr. Politsky’s evidence emphasizes that the BRA was only intended to apply to the three offers to purchase which he signed at the same time as the BRA. Further, he testified that he did not agree to a December 31, 2016 expiration date.

[16] The evidence with respect to the creation of and the signing of the BRA is contradictory. The evidence of the parties is extremely different. Mr. Politsky’s evidence is that on the evening of March 13, 2016 he, his wife, and their children were leaving for a vacation. Mr. Knox and Ms. Maglietta met them on their driveway. The family was already in the airport limousine. Mr. Politsky signed various papers. The meeting lasted for a few minutes. He signed but did not get copies of the following documents:

(a) the BRA. Mr. Politsky does not recall seeing the BRA or discussing it with Mr. Knox or Ms. Maglietta;

(b) an offer to purchase a home at 70 Otter Crescent;

(c) an offer to purchase unit 6205 at the Shangri La residences; and

(d) an offer to purchase unit 6402 at the Shangri La residences.

[17] Mr. Politsky deposed that when he signed the documents on March 13, 2016 in his driveway, they were incomplete. He was told they would be filled in at Summerhill's office. Mr. Politsky is sure that he would not have signed the BRA if he had seen a December 31, 2016 expiry date.

[18] Mr. Politsky’s wife also deposed that both Ms. Maglietta and Mr. Knox arrived at their home on March 13, 2016 when she and her children were in the airport limousine. She waited in the limousine while Mr. Knox gave Mr. Politsky several documents which he signed in approximately two to five minutes.

[19] Mr. Knox's evidence on what happened during this meeting is materially different and appears to be contradictory. He testified that:

• The offers were prepared in the Summerhill office by Ms. Maglietta on March 13, 2016 at 1:39pm and that he drove himself to Mr. Politsky’s house. Ms. Maglietta was not at the meeting.

• When he arrived between 4:30pm and 5:00pm, Mr. Politsky’s wife was inside packing with the children. He went into the house to have Mr. Politsky sign the documents on their kitchen table.

• He deposed that Ms. Maglietta must have signed and initialed the offers to purchase dated March 13, 2016 before he took them for signature to Mr. Politsky.

• Because he testified that Ms. Maglietta was not there, she must have signed the offers next to the "signed, sealed and delivered in the presence of D. Maglietta" and next to Mr. Politsky’s signature after the fact. He testified "Because I probably brought the offer back to the office and noticed that the witness signature was missing. She asked me if he signed it, I said yes, so she witnessed it”.

• He also testified that it is not his practice to have documents witnessed after they are signed.

• He could not explain how Ms. Maglietta had signed the BRA on March 11, 2016, two days before the document was supposedly created in their electronic system.

• He returned to his office and scanned the signed copies of the offers (to his email) by 6:00pm. However, the evidence is that the offer for 70 Otter Crescent was not submitted to the vendor, until March 14, 2016 at 2:30pm.

• He gave a hard copy of the BRA to Mr. Politsky on March 13, 2016 because he scanned it when he got home and emailed it to him immediately.

[20] Mr. Politsky submits that Mr. Knox’s evidence contains “a series of contradictions”. During his cross-examination he deposed that he returned to the office to scan a copy and sent it by email to Mr. Politsky, immediately. In response to his undertaking to produce a copy of the alleged email correspondence, Mr. Knox took the position that a hard copy was given to Mr. Politsky at the time it was signed. Further, there is no evidence to support Mr. Knox’s position that it is his practice or that he ever explained the scope and applicability of the BRA to Mr. Politsky.

[21] There is also contradictory evidence between the parties as to whether the December 31, 2016 expiry date was included at the time Mr. Politsky signed the BRA.

[22] Mr. Politsky challenges the validity of the BRA on the basis of unconscionability because of the circumstances surrounding its execution. The BRA was signed together with three offers to purchase on March 13, 2016 just before Mr. Politsky and his family left for their vacation. It is argued that if Mr. Knox's evidence is accepted, then at best he arrived at Mr. Politsky's home after 5:00 p.m. and was back at his office by 6:00 p.m. During this time, Mr. Politsky had to review and sign three agreements of purchase and sale and the BRA. Both Mr. Politsky and his wife testified the meeting lasted less than five minutes and occurred on their driveway with a limousine waiting to take them to the airport. Mr. Politsky's evidence is also that parts of the agreements were incomplete.

[23] As well, Mr. Politsky's evidence is that he did not believe the BRA continued to be in effect when he bought the property. Further, Mr. Politsky testified that he told Mr. Knox that he was looking at the Property which he purchased. He did not attempt to hide the purchase through a numbered company.

[24] He also did not take steps to conceal the purchase price as Summerhill alleges. The seller demanded that he use a numbered company as a term of the agreement of purchase and sale and confidentiality agreement so that the land transfer tax was paid in a certain manner. Mr. Politsky and his wife invited Mr. Knox and Ms. Maglietta to the Property they purchased for dinner in December 2016. Mr. Politsky’s wife testified that Ms. Maglietta brought them a gift and that they did not mention the property purchase. Mr. Politsky and his wife testified that Mr. Knox and Ms. Maglietta showed no signs of being upset.

[25] Mr. Politsky testified that he told Mr. Knox that he had been introduced to a builder who was building a new home in Forest Hill. Mr. Politsky told Mr. Knox that he would not be able to act as agent on the deal. Mr. Knox told Mr. Politsky that he had Mr. Knox’s permission to pursue the deal. Mr. Knox did not mention that there was a binding BRA in effect. Mr. Politsky and his wife then bought the home located at 221 Dunvegan Road in the City of Toronto (“221 Dunvegan”). The vendor would not pay real estate commission. Mr. Politsky paid a further finder’s fee to Neil Wagman of Forest Hill Real Estate brokerage.

[26] Both Mr. Knox and Ms. Maglietta were aware that Mr. Politsky had an ongoing business relationship with Neil Wagman. He was the listing agent for Mr. Politsky’s mother’s home and had been the prior listing agent for their Hazelton Hotel Condo before being replaced by Mr. Knox and Ms. Maglietta. Mr. Knox and Ms. Maglietta knew or ought to have reasonably known that Neil Wagman was also searching for suitable homes for Mr. Politsky and his wife in Forest Hill.

[27] On November 17, 2016 Mr. Politsky told Mr. Knox and Ms. Maglietta that he had purchased a property. Mr. Knox never communicated that he was upset.

[28] Further, Mr. Politsky deposed that Mr. Knox telephoned him in early January 2017 and advised him that Ms. Maglietta was bringing a complaint against Mr. Wagman and requested his cooperation. During this conversation, Mr. Knox also informed Mr. Politsky that they had backdated the Second Summerhill Buyer Representation Agreement to reflect an end date of December 31, 2016.

[29] Mr. Knox, however, denies calling Mr. Politsky and testified that it was Mr. Politsky who called him when Mr. Politsky found out from Mr. Wagman about the RECO complaint.

[30] Mr. Politsky also submits that his counterclaim asserts a valid cause of action and that the issues ought to properly be determined by way of a trial where the inconsistencies in the written record can be put to the witnesses and properly adjudicated. I do not find that the Counterclaim is frivolous and vexatious.

[31] Mr. Politsky submits that his counterclaim pleads causes of action for breach of trust, breach of contract, and breach of fiduciary duty. However, Summerhill also submits on this motion for summary judgment that one or more of these causes of action in the Counterclaim are barred by the expiry of a limitation period. This argument was not developed at the hearing.

[32] In Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.R. 87, the Supreme Court of Canada provided a roadmap to follow on a summary judgment motion. At para. 66, the court states:

"On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a).

If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness…”

[33] The Supreme Court of Canada in Hryniak attempted to create a procedure designed to be expeditious and affordable. However, the process must also ensure that the dispute is resolved fairly and justly.

[34] The Ontario Court of Appeal stated in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, at paras. 35 and 37, that the advisability of a staged summary judgment process must be assessed in the context of the litigation as a whole. The Court noted that in a staged summary judgment process there is a risk that a trial judge would develop a fuller appreciation of the relationships and the transactional context than the motion judge. This difference in appreciation could lead to a trial decision that would be implicitly inconsistent with the motion judge's finding, even though the parties would be bound by the motion judge’s finding. This difference in appreciation could lead to inconsistent findings and substantive injustice. At paras. 44-45 the court stated:

“…Evidence by affidavit, prepared by a party's legal counsel, which may include voluminous exhibits, can obscure the affiant's authentic voice. This makes the motion judge's task of assessing credibility and reliability especially difficult in a summary judgment and mini-trial context. Great care must be taken by the motion judge to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all.

Judges are aware that the process of preparing summary judgment motion materials and cross-examinations, with or without a mini-trial, will not necessarily provide savings over an ordinary discovery and trial process, and might not "serve the goals of timeliness, affordability and proportionality" (Hryniak at para. 66). Lawyer time is expensive, whether it is spent in court or in lengthy and nuanced drafting sessions. I note that sometimes, as in this case, it will simply not be possible to salvage something dispositive from an expensive and time-consuming, but eventually abortive, summary judgment process. That is the risk, and is consequently the difficult nettle that motion judges must be prepared to grasp, if the summary judgment process is to operate fairly.”

[35] The Ontario Court of Appeal considered the appropriateness of motions for summary judgment that will determine some of the issues, but will not dispose of the action as a whole. The Ontario Court of Appeal cautioned parties and judges about the limits and problems associated with partial summary judgment motions.

[36] The Court explained, at para. 45, that partial summary judgment motions tend to defeat the stated objectives of proportionality, timeliness and affordability underlying Hryniak.

[37] The Court of Appeal held in Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at para. 34, that a partial summary judgment motion should be considered a "rare procedure" that is reserved for issues that can be easily bifurcated from the main action and that can be dealt with expeditiously and in a cost-effective manner.

[38] The Court, at paras. 26-34, reasoned that this approach is entirely consistent with the Supreme Court’s comments in Hryniak:

“[26] The pre-Hryniak appellate jurisprudence on partial summary judgment limited its availability. At para. 3 of Corchis v. KPMG Peat Marwick Thorne, 2002 41811 (ON CA), [2002] O.J. No. 1437 (C.A.), this court applied Gold Chance International Ltd. v. Daigle & Hancock, [2001] O.J. No. 1032 (S.C.J.) to state that:

[P]artial summary judgment ought only to be granted in the clearest of cases where the issue on which judgment is sought is clearly severable from the balance of the case. If this principle is not followed, there is a very real possibility of a trial result that is inconsistent with the result of the summary judgment motion on essentially the same claim.

[27] Since Hryniak, this court has considered partial summary judgment in Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450,120 O.R. (3d) 438 and in Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922,133 O.R. (3d) 561. Baywood was decided in the context of a motion for summary judgment on all claims, but where only partial summary judgment was granted. CIBC involved a motion for partial summary judgment.

[28] In both Baywood and CIBC, the court analyzed the issue from the perspective of whether (i) there was a risk of duplicative or inconsistent findings at trial and whether (ii) granting partial summary judgment was advisable the context of the litigation as a whole. In both cases, the court held that partial summary judgment was inadvisable in the circumstances.

[29] 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 Hryniak.

[30] 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 always the possibility of an appeal.

[31] Second, a motion for partial summary judgment may be 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.

[32] 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.

[33] 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.

[34] 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 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.” [emphasis added]

[39] On this motion for summary judgment, I must consider if I can reach a fair and just determination on the merits. I must be able to make the necessary findings of fact, apply the law to the facts, and the motion must be a proportionate, more expeditious, and less expensive means to obtain a just result, than a trial.

[40] The Defendant submits that summary judgment is not possible in this case because there is insufficient evidence before the court and there are genuine issues requiring a trial. The Plaintiff however, argues that there are no genuine issues in dispute which require a trial.

[41] The contradictory evidence on this motion is relevant to major material issues that are in dispute and that must be decided in this action.

[42] In this action, there are many issues in dispute, and contradictory evidence on these issues, namely, the issue of the validity of the BRA as well as Mr. Politsky’s claims in the counterclaim.

[43] The Court of Appeal in 2212866 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670, at para. 39, stated that where there was contradictory and inconsistent affidavit evidence on an issue, the credibility of the deponents could not be determined based on the written record. Where credibility cannot be assessed on a written record, this indicates either that oral evidence pursuant to r. 20.04(2.2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 or a trial is required.

[44] I will now apply the Supreme Court of Canada’s roadmap from Hryniak. I must first determine whether on the basis of the evidentiary record alone, are there genuine issues that require a trial. I must ask if the evidentiary record in front of me provides me with the evidence I need to "fairly and justly adjudicate the dispute”.

[45] In my view, the answer is no. As there is contradictory evidence relevant to the major issues. I find that there are genuine issues requiring a trial.

[46] Second, I must determine if the need for a trial in this case can be avoided by the use of my fact-finding powers. I must ask if it would be in the interest of justice to do so. Will the use of these powers that I have lead to a "fair and just result" that will serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole?

[47] In my view, again the answer is no. This is a case which requires a trial on major issues in dispute. To resolve this case justly and fairly, I would need to use the additional fact-finding powers to conduct almost the entire trial. That would not be in the interests of justice.

[48] As stated above, the Plaintiff submits that Mr. Politsky’s Counterclaim should be dismissed as it is barred by the limitation period. Although this issue could be appropriate for partial summary judgment, in light of my findings with respect to the other genuine issues for trial it would not be appropriate to attempt to resolve this issue because the facts of this case are so inter-related and intertwined. A finding on the Counterclaim’s limitation period issue by this Court could potentially lead to the concerns set out by our Court of Appeal which I referred to above.

[49] To conclude, as the evidentiary record on this motion, in my view, raises genuine issues that require a trial, the motion for summary judgment is dismissed.

[50] There is one further practical issue. The Supreme Court of Canada in Hryniak also held, at para. 78, that:

Where a motion judge dismisses a motion for summary judgment, in the absence of compelling reasons to the contrary, she should also seize herself of the matter as the trial judge.

[51] In my view, this is an appropriate case for me to follow the Supreme Court's direction. I must, however, qualify this to be subject to the practical reality of our court's ability to schedule trials in a timely and expeditious manner. I will not be seized of this trial if the effect of my unavailability would be to delay the hearing of the trial between the parties. If it is possible to do so without adverse delay or consequences to the parties, I seize myself of the trial of this matter as directed in Hryniak.

[52] This motion is dismissed.

Costs

[53] Mr. Politsky is the successful party on this motion. If the parties have reached an agreement on costs at the hearing of this matter, that agreement will apply. If there has been no agreement reached on costs at the hearing or Mr. Politsky wishes to make submissions that costs on a higher scale should be awarded and the parties are unable to agree on such costs, the parties may make brief written submissions to me no longer than three pages in length. The Defendant’s submissions are to be delivered by 12:00 p.m. on June 20, 2019, and the Plaintiff’s submissions are to be delivered by 12:00 p.m. on June 27, 2019. Any reply submissions are to be delivered by 12:00 p.m. on July 5, 2019.

[54] Submissions are to be delivered to Room 106, 361 University Avenue or via email to my assistant. After July 5, 2019, if no submissions are submitted for costs, the matter will be considered at an end and the file returned to the motions office.

Pollak J.

Date: June 13, 2019