COURT FILE NO.: C19-00000007
DATE: 2019-11-04
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
900351 Ontario Inc.
Plaintiff
– and –
Martian Properties Inc., Douglas Smith aka Doug Smith, Gordon Smith aka Gord Smith, Cliff Barnes, Stavros Moutsatsos aka Steve Moutsatsos, Weaver Simmons, The Ontario Provincial Police, Joel Lavoie aka Joe Lavoie, Bonnie Coultis, John Robertson, Marie Ford
Defendants
Laura Pinkerton, as agent for 900351 Ontario Inc.
Ian Roland, for Martian Properties Inc., Douglas Smith aka Doug Smith, Gordon Smith aka Gord Smith and Cliff Barnes
Sabrina A. Lucenti, for Stavros Moutsatsos aka Steve Moutsatsos and Weaver Simmons
Alex Redinger, for The Ontario Provincial Police, John Robertson, Joel Lavoie aka Joe Lavoie, Bonnie Coultis and Maria Ford
HEARD: October 17, 2019
DECISION ON MOTION
R.D. Gordon, J.
Overview
[1] The plaintiff has brought an action against various defendants arising out the transfer of certain lands situated in Gore Bay, Ontario. The plaintiff says the defendants conspired together to acquire the property by fraud.
[2] The moving defendants, Martian Properties Inc., Douglas Smith, also known as Doug Smith, Gordon Smith, also known as Gord Smith and Cliff Barnes, brought several motions returnable before me seeking: (1) An order preserving their right to challenge the ability of Ms. Laura Pinkerton to represent the plaintiff; (2) An order quashing a summons directed to Douglas Smith and requiring him to be present to give evidence at the hearing of these motions; (3) An order dismissing the plaintiff’s claims; and (4) In the alternative, an order requiring the plaintiff to post security for costs.
[3] Motions for dismissal have also been brought by Stavros Moutsatsos also known as Steve Moutsatsos, Weaver Simmons, The Ontario Provincial Police, Joel Lavoie, also known as Joe Lavoie, Bonnie Coultis, John Robertson and Marie Ford. I granted an adjournment of those motions at the request of the plaintiff.
Preliminary Issues
[4] Ms. Laura Pinkerton is noted on the statement of claim as the agent of the plaintiff. She is not a lawyer and has brought no motion for leave to represent the plaintiff. The moving defendants indicated a willingness to consent to an order granting leave to Ms. Pinkerton on a without prejudice basis so that they may move to set aside the order if, in the future, they deem it necessary to do so.
[5] Clearly the parties wish to proceed with this motion today. In my view, rather than granting leave on a without prejudice basis, it is preferable that I simply grant leave to Ms. Pinkerton to represent the plaintiff for the purposes of the motions before me today. It is ordered accordingly.
[6] A second preliminary issue was a request by Ms. Pinkerton that I recuse myself from this case. She argued that there is a reasonable apprehension of bias by virtue of the following: (1) I spoke at an awards dinner in praise of James Simmons, a partner in the firm Weaver Simmons, which is a defendant in this case; (2) I was associated with a curling team sponsored by Manitoulin Transport, a company closely related to the moving defendants; (3) I have an interest, albeit not financial, in the property that is at the heart of these proceedings.
[7] I declined to recuse myself and gave brief oral reasons. I now provide the following supplementary reasons.
[8] My remarks at the awards dinner in honour of Mr. Simmons were offered on behalf of the court in praise of his abilities as a litigator, earned over several decades of legal practice in Sudbury and throughout northeastern Ontario. That a lawyer is well regarded as a litigator does not predispose the court to any conclusion in a case in which the lawyer is involved, whether as counsel or as a litigant.
[9] I do not now have, nor have I ever had, an affiliation with any curling team sponsored by Manitoulin Transport.
[10] My grandparents built and operated Gordon’s Lodge until 1970 when it was sold. My father may, at one time, have owned some of the property that now forms part of the lands in question. To my knowledge, my family has had no financial interest in the property for decades. Given their history in my family, I have remained interested in the lands in the sense of knowing the extent to which it has remained as developed by my grandparents. I have no other interest in the property.
[11] Bias is a condition or state of mind which sways judgment and renders a judicial officer unable to exercise his or her functions impartially in a particular case. [See R. v. Bertram, [1989] O.J. No. 2123].
[12] In R. v. S. (R.D.), 1997 324 (SCC), [1997] 3 S.C.R. 484, Justice Cory of the Supreme Court of Canada articulated the test for the finding of a reasonable apprehension of bias: “The apprehension of bias must be a reasonable one, held by reasonable and right-minded persons, applying themselves to the question and obtaining thereon the required information…The test is ‘what would an informed person, viewing the matter realistically and practically—and having thought the matter through – conclude…’”.
[13] It is my view that the concerns expressed by the plaintiff, whether considered individually or in totality, lead to no reasonable apprehension of bias.
[14] The final preliminary issue relates to a subpoena issued at the instance of the plaintiff to require the defendant Douglas Smith to attend and give evidence at these motions. I gave brief oral reasons in support of an order quashing the subpoena because Mr. Smith would have no relevant evidence to provide the court on the issues which are currently before it.
Background Facts
[15] The lands which are at the heart of the dispute in this matter are municipally known as 1 Water Street, Gore Bay (the “Lands”). For many years it was the site of a resort known as Gordon’s Lodge.
[16] As of April 4, 2012, the lands were owned by 917488 Ontario Inc., an Ontario corporation of which Laura and Andrew Pinkerton were the officers and directors. On that date there was registered under the Personal Property Security Act, notice of a security agreement entered into between the company and Mr. and Mrs. Pinkerton, securing the sum of $1,574,000. Although the actual security agreement was not filed at the hearing of this motion, I accept the representation made by Ms. Pinkerton that included in the description of secured assets in that agreement was the real estate which is the subject of this litigation, and additional “unpinned real property” in which Ms. Pinkerton alleges an interest. The security agreement was not registered as a mortgage against the Lands under the Land Titles Act or the Registry Act.
[17] On July 17, 2013, APEA Investment Group Inc. (“APEA”) loaned $1,155,000 to 917488 Ontario Inc. on the strength of a first mortgage on the Lands. Interest was to accrue at the rate of 10% per annum and monthly payments were to be $9,625. The maturity date was August 1, 2016. The mortgage did not include any “unpinned real property” and was duly registered under the Land Titles Act.
[18] On April 1, 2015, 917488 Ontario Inc. defaulted in payment of the APEA mortgage and no payments were made thereafter.
[19] On April 20, 2015, 917488 Ontario Inc. signed a transfer of the Lands to Mr. and Mrs. Pinkerton. This transfer included the “unpinned real property”. The transfer was not registered at that time.
[20] On June 12, 2015, Mr. and Mrs. Pinkerton obtained Default Judgment signed by O’Neill J., against 917488 Ontario Inc. for $1,574,000 and possession of the Lands, including the “unpinned real estate”.
[21] On March 3, 2016, APEA obtained default judgment for the balance owing on its mortgage and for possession of the Lands. On April 8, 2016, a writ of possession was issued in its favour.
[22] 917488 Ontario Inc. moved to set aside the default judgment in favour of APEA. It argued, among other things, that it had an arguable defence on the merits because: (1) Mr. and Mrs. Pinkerton held an interest in the property (the security agreement registered under the Personal Property Security Act on April 4, 2012) that was prior in time to the APEA mortgage and therefore stood in priority to it; and (2) The APEA mortgage was void ab initio for want of compliance with the Planning Act because it did not include the “unpinned real property”. In my decision dated June 29, 2016, in considering whether or not to set aside default judgment, I determined that 917488 Ontario Inc. did not have a viable defence because registration of the security agreement under the Personal Property Security Act did not afford Mr. and Mrs. Pinkerton priority to APEA, and that there was insufficient evidence before me to determine whether there was a legitimate Planning Act issue relative to the APEA mortgage. I declined to set aside default judgment.
[23] Mr. and Mrs. Pinkerton sought leave to issue a writ of possession for the lands covered by their judgment for possession. In another decision dated June 29, 2016, I declined to grant leave, finding that their right of possession was subordinate to the possessory rights of APEA.
[24] On August 10, 2016, Mr. and Mrs. Pinkerton registered electronically, a transfer of the Lands from 917488 Ontario Inc. to themselves personally, and then from themselves personally to 900351 Ontario Inc. Neither transfer included the “unpinned real estate”.
[25] APEA took possession of the Lands pursuant to a writ of possession. The date it obtained possession is not clear from the materials before me.
[26] On June 29, 2017, APEA transferred the Lands to Martian Properties Inc. pursuant to the power of sale contained in its mortgage.
[27] Although the claims of the plaintiff are imperfectly pleaded, the essence of its claims are:
a) That it is the lawful owner of the lands.
b) The mortgage held by APEA and upon which it purported to sell the property to Martian Properties Inc. was void for failing to comply with the Planning Act, and in any event was subordinate to the security held by Mr. and Mrs. Pinkerton, from whom the plaintiff subsequently obtained title.
c) The defendants knew or ought to have known of the plaintiff’s valid claim to the property and conspired to commit fraud by unlawfully perpetuating the possessory rights of APEA and Martian Properties Inc. and coordinating the unlawful transfer of the lands.
[28] The moving defendants seek dismissal of the action. They say it is an abuse of process as it seeks to re-litigate ownership rights that were effectively decided by me in my decision dated June 29, 2016, is an impermissible collateral attack on my earlier decisions, and in any event should be dismissed summarily because there is no genuine issue requiring a trial.
Analysis
[29] The moving defendants are of the view that my decision of June 29, 2019, in file number C-125-0001 amounts to a determination that the plaintiff’s legal rights are subordinate to those of APEA (and therefor to those of Martian Properties Inc.), and that the APEA mortgage complied with the provisions of the Planning Act, with the result that any subsequent action to determine those issues is an abuse of process.
[30] There may well be issues relating to abuse of process, issue estoppel and res judicata. However, the moving defendants also sought summary judgment dismissal of the plaintiff’s action on the basis that there is no genuine issue requiring a trial and I prefer to dispose of this motion on that basis.
[31] Rule 20.04(2)(a) provides that the court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. Rule 20.04(2.1) gives the court the ability to weigh the evidence, evaluate the credibility of a deponent and draw reasonable inferences on the evidence in coming to its decision. There is no genuine issue requiring a trial where the summary judgment motion (a) allows the judge to make the necessary findings of fact; (b) allows the judge to apply the law to the facts; and (c) is a proportionate, more expeditious, and less expensive means to achieve a just result. [See Hryniak v. Mauldin 2014 SCC 7].
[32] To succeed in its claim, the plaintiff will need to establish that Martian Properties Inc. is not the lawful owner of the property. If it is the lawful owner of the property, there can have been no conspiracy to obtain it fraudulently.
[33] The plaintiff offers two bases for challenging title.
[34] The first is that it held a secured interest in the Lands in priority to APEA (from whom Martian Properties Inc. acquired the property) with the result that any interest of Martian Properties Inc., is subject to its prior interest. The argument is that Mr. and Mrs. Pinkerton had a prior registered encumbrance when APEA entered into its mortgage because of the registration of their general security agreement under the Personal Property Security Act.
[35] In my decision of June 29, 2016, in C-15-0001, I found the viability of this defence as then offered by 917488 Ontario Inc. to be poor. As I wrote then, and repeat now, including real property in a general security agreement and registering it under the provisions of the Personal Property Security Act is not notice to a subsequent mortgagee of the real property. The plaintiff’s contention to the contrary is simply a misstatement of the law. The mortgage held by APEA, obtained in return for funds advanced, and properly registered under the Land Titles Act without notice of Mr. and Mrs. Pinkerton’s security interest has priority to the interests of Mr. and Mrs. Pinkerton and anyone who obtains title from them, including the plaintiff herein. The judgment of O’Neill J. granting Mr. and Mrs. Pinkerton default judgment against 917488 Ontario Inc. for possession does nothing to change that. Any interest alleged by Mr. and Mrs. Pinkerton or any person or entity attaining any interest from them, is subject to the priority of the mortgage of APEA or those who acquire their interest from APEA. The plaintiff cannot succeed with this argument. There is no genuine issue requiring a trial.
[36] The second basis for challenging the title of Martian Properties Ltd. is that the APEA mortgage was void for failing to comply with the Planning Act. In general terms, the Planning Act provides, among other things, that a party mortgaging real property must include in the mortgage all abutting lands owned by it. If it does not do so, the mortgage is of no force. The plaintiff contends that because the mortgage by 917488 Ontario Inc. to APEA did not include the “unpinned real estate” which abuts the Lands, the mortgage was void.
[37] As 917488 Ontario Inc. was the mortgagor when APEA’s mortgage was placed, to be successful with this argument the plaintiff needs to establish that 917488 Ontario Inc.’s ownership of the unpinned land is a genuine issue requiring a trial.
[38] The unpinned lands at issue are Parts 1 and 2 on Plan 31R-4015. Part 1 is part of Water Street in the Town plot of Gore Bay, Municipality of the Town of Gore Bay, and Part 2 is part of the unopened shore road allowance in front of Lot 5, Concession 11 in the Township of Gordon.
[39] There was no evidence before me that Part 1 has ever been the subject of a stop up and close bylaw by the Town of Gore Bay, and no evidence that the Town has ever committed to its sale to anyone.
[40] There was no evidence before me that Part 2 has ever been the subject of a stop up and close bylaw by the Township of Gordon, and no evidence that the Township has ever committed to its sale to anyone.
[41] There was no evidence before me capable of establishing a claim by 917448 Ontario Inc., to title by way of adverse possession.
[42] The plaintiff’s arguments in this respect seem to be premised upon the following:
a) Certain cottages that were considered to be the property of the owner of 1 Water Street were situated in whole or in part on the unpinned lands.
b) The unpinned lands were included in the default judgment for possession signed by O’Neill J. in favour of Mr. and Mrs. Pinkerton.
c) The unpinned lands were included in the signed but unregistered transfers made by 917488 Ontario Inc. in favour of Mr. and Mrs. Pinkerton, and by Mr. and Mrs. Pinkerton to the plaintiff.
[43] That various owners of 1 Water Street have encroached upon the unopened shoreline road allowance does not result in ownership of that property. The property is owned by the municipality within which it is situate until properly transferred by it in accordance with the provisions of the Municipal Act.
[44] That the unpinned lands were included in the judgment for possession signed by Justice O’Neill does not confer ownership of the unpinned lands upon Mr. and Mrs. Pinkerton. Even if it did, ownership on that basis did not arise until long after the mortgage to APEA was granted by 917448 Ontario Inc.
[45] That the unpinned lands were included in the unregistered transfers is neither here nor there. Signing a transfer of real property to which you have no title does nothing to establish your title. It is interesting to note that the transfers from 917488 Ontario Inc. to Mr. and Mrs. Pinkerton, and from Mr. and Mrs. Pinkerton to the plaintiff that were registered did not include the unpinned lands. Indeed, they could not, as neither the company nor the Pinkertons were the owners of those lands.
Conclusion
[46] It is well settled law that on a motion for summary judgment the parties must put their best foot forward to establish their case. On the evidence before me, the plaintiff has failed to establish any basis for its claim that the title of Martian Properties Inc. to the Lands is in any way unlawful or untenable. The legitimacy of that claim is fundamental to the plaintiff’s case. Its failure to raise a genuine issue requiring a trial on that issue leaves me with no choice but to grant the moving defendants’ motion for dismissal.
[47] In the circumstances, the moving defendants’ motion for security for costs need not be determined.
[48] If the parties are unable to agree on costs, they may make written submissions to me not to exceed three pages plus attachments each, within 45 days of the release of this decision.
The Honourable Mr. Justice Robbie D. Gordon
Released: November 4, 2019
COURT FILE NO.: C19-00000007
DATE: 2019-11-04
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
900351 Ontario Inc.
Plaintiff
– and –
Martian Properties Inc., Douglas Smith aka Doug Smith, Gordon Smith aka Gord Smith, Cliff Barnes, Stavros Moutsatsos aka Steve Moutsatsos, Weaver Simmons, The Ontario Provincial Police, Joel Lavoie aka Joe Lavoie, Bonnie Coultis, John Robertson, Marie Ford
Defendants
Decision on motion
R.D. Gordon, J.
Released: November 4, 2019