COURT FILE NO.: CV-16-566471 DATE: 20200724

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

AEON SODDING CORP. Plaintiff – and – THE ROYAL BANK OF CANADA Defendant

Counsel: Eric Turkienicz, for the Plaintiff Adam Ship and Nicholas E. Fitz, for the Defendant

HEARD: December 12, 2019 M. D. FAIETA j.

Reasons for Decision

INTRODUCTION

[1] The plaintiff, Aeon Sodding Corp. (“Aeon”), is a residential landscaping company that retained Steven Mann to collect unpaid accounts through court proceedings.

[2] From September 2012 until March 2016 Aeon retained Mann, as a legal professional, to collect numerous unpaid accounts. Various amounts towards these services were paid by Aeon to Mann using a Visa card (“Visa Card”) issued by the defendant, The Royal Bank of Canada (“RBC”).

[3] In April, 2016 the Aeon discovered that Mann was neither a paralegal nor a lawyer as he had represented and that he had done no work to collect any of the outstanding accounts despite having reported to Aeon that claims had been issued, trials held, judgments granted and appeals dismissed. By that point, Aeon had paid $432,814.62 to Mann by way of the Visa Card issued by RBC. Aeon immediately contacted RBC and asked that these charges be refunded.

[4] In August, 2016, RBC advised Aeon that it could not dispute Mann’s charges as the time for doing so had passed. On November 28, 2016, Aeon commenced civil proceedings against Mann and on November 15, 2017, it obtained a default judgment which it has not in any way been satisfied.

[5] On December 21, 2016, Aeon commenced this action for damages in the amount of: (a) $450,000.00 for breach of contract and unjust enrichment; and (b) punitive damages in the amount of $75,000. At the hearing of this motion, Aeon advised that it was pursuing this action solely on the basis of a breach of contract.

[6] Aeon alleges that RBC breached the provisions of the Card User Agreement in that it failed to comply with the International Operating Regulations made by Visa Canada Corporation which govern all cards issued by banks that use the Visa card network. In particular, Aeon alleges that RBC erred in failing to approve the chargeback as such request had been “reported within 120 days of the cardholder discovering that the services were counterfeit”.

[7] RBC brings this motion for summary judgment for an order dismissing this action on the basis that: (a) RBC did not breach any legal duty owed to Aeon; (b) In any event, Aeon’s claim is barred by virtue of its agreement with RBC.

[8] For the reasons given below, I grant RBC’s motion for summary judgment.

BACKGROUND

The Relationship between Aeon and RBC

[9] Adriel Ortino (“Ortino”) is the President and Director of Aeon. His affidavit provides the following additional background information:

• He has a Bachelor’s degree in Economics;
• Aeon, a landscaping company, was incorporated in 2008;
• He obtained a Visa Business Platinum Avion credit card from RBC on September 5, 2008 which he intended to use to pay and manage Aeon’s expenses;
• Until he commenced this action, Ortino was unaware of the specific rules, policies and regulations imposed by Visa which governed RBC’s actions with respect to the Visa Card;
• Nevertheless, Ortino was aware that he could request a chargeback from RBC in the event of fraud or other problematic charges;

[10] The affidavit of Sandrine Chuen Cheong, a Subject Matter Expert in the Maintenance & Investigations Services Group with RBC, provides the following background:

1. Aeon applied for and obtained the Visa Card through RBC;
2. On September 5, 2008, when it obtained its Visa Card, Aeon agreed to the RBC Visa Agreement (the “Agreement”);
3. The Agreement was modified slightly during the material times when Aeon held the Visa Card however all terms material to this proceeding are substantively identical;
4. The Agreement contained the following material terms: Problems with a Purchase If you [the Plaintiff] have problems with anything you buy using your Credit Card or your Account number, you must pay the amount owing on your Account and settle the problem directly with the store or merchant. In some circumstances, we [RBC] may be able to provide assistance in resolving disputed transactions. Your Visa Statement It is up to you to review your Visa Statement and to check all transactions, interest charges and fees. If you think there is an error on your Visa Statement, you must contact us. If you do not contact us within 30 days of the last day of the relevant statement period, the Visa Statement and our records will be considered correct and you may not later make a claim against us in respect of any charges on the Visa Account. [Emphasis added]
5. Visa provides a payment card network that allows for the authorization, clearing and settlement of transactions over it. As a customer of Visa, RBC is able to access this network, which RBC in turn provides to its customers.
6. Under the Visa payment system, credit cards are issued to cardholders. In this case, since RBC issued the Visa Card, it was the “Issuer”. As an Issuer of Visa credit cards, RBC is contractually obligated to Visa to follow the rules Visa prescribes in relation to the conduct of transactions that are placed into the Visa payment system through credit cards issued by RBC.
7. In general, Visa cards provide a method of payment. Cardholders may use them to pay for services or merchandise, and the retailer that provides the services or merchandise charges the Visa card. In the credit card industry, this retailer is referred to as the “Merchant”.
8. The Merchant is provided credit card acceptance services and its payment terminals by another financial institution, known as its “Acquirer”. RBC does not operate as an Acquirer.
9. During the relevant time frame, Aeon charged a significant volume of its purchases of services and merchandise from Merchants to its Visa Card. As the Issuer of the credit card, RBC would pay the balances owing to each of the Merchant’s respective Acquirers. The Acquirers are responsible for remitting payments they receive from Issuers to their respective Merchants, who are their customers. Aeon, as the cardholder, would ultimately pay RBC, as its card Issuer, for these purchases the following month and RBC would pay the applicable Merchant’s Acquirers (who would in turn pay the Merchants).
10. A chargeback is a transaction that, although initially authorized by an Issuer and cleared by an Acquirer, is later returned by the Issuer to the Acquirer due to various reasons, including allegations of fraud by a cardholder. Visa has prescribed detailed rules that govern chargebacks which RBC is contractually obligated to adhere to.
11. The chargeback process contemplated by the Visa rules requires that a disputed transaction meet Visa’s criteria in order to be returned to the Acquirer. A transaction that meets these criteria is “returned” to the Acquirer that ultimately processed the transaction on behalf of the Merchant. The Acquirer will invariably attempt to “pass on” the returned transaction to the Merchant for payment, but if the Merchant is insolvent, the Acquirer will generally be responsible for the charge.
12. In other words, when a chargeback occurs, the Issuer refunds the transaction value to the Cardholder and then charges the transaction back to the relevant Acquirer who is then required under the Visa rules to reimburse the Issuer. The Acquirer will then attempt to pass on the cost of the reimbursement to the Merchant.
13. Under the Visa International Operating Regulations (the “Visa Rules”), a “Chargeback” is defined as a “Transaction that an Issuer returns to an Acquirer”. The process for a Chargeback is briefly summarized in the Visa Rules as follows: After receiving a Presentment [a transaction clearing record], an Issuer may charge back a Transaction to the Acquirer under the conditions specified in beginning in Reason Codes … [emphasis added]
14. There are a number of grounds, or “Reason Codes”, on which a chargeback can be instituted (the “Reason Codes”).
15. For the purposes of these proceedings, the relevant Reason Codes are: (a) Reason Code 30 – Services Not Provided or Merchandise Not Received; and, (b) Reason Code 53 – Not as Described or Defective Merchandise.
16. Reason Code 30 – Services Not Provided or Merchandise Not Received – is described by the Visa Rules as follows: The Cardholder participated in the Transaction but the Cardholder or an authorized person did not receive the merchandise or services … because the Merchant … was unwilling or unable to provide the merchandise or services”.
17. Among other limits imposed, Reason Code 30 imposes the following time limit for the chargeback: Chargeback Time Limit – Reason Code 30 Either of the following:
    • 120 calendar days from the Transaction Processing Date
    • If the merchandise or services were to be provided after the Transaction Processing Date, 120 calendar days from the last date that the Cardholder expected to receive the merchandise or services or the date that the Cardholder was first made aware that the merchandise or services would not be provided, not to exceed 540 calendar days from the Transaction Processing Date [emphasis added]
18. There are two different applicable time periods. The first is 120 days from the date on which the transaction was processed on the credit card. This applies when the services were rendered by the Merchant on or prior to the payment date. The second time period is 120 days from the date that the cardholder was expected to receive the services (to a maximum of 540 days from the transaction processing date). The second time period applies where the cardholder is pre-paying for services to be rendered in the future. My understanding is that the second time period is longer because the cardholder has not yet received the services as of the date on which the transaction was processed (so cannot complain at the time of the transaction processing date).
19. Reason Code 53 – Not as Described or Defective Merchandise – is described by the Visa Rules as follows: The Cardholder received damaged, defective, or counterfeit merchandise, or the merchandise or service did not match what was described on the Transaction Receipt or other documentation presented at the time of purchase, or the merchandise was otherwise unsuitable for the purposes sold, or the Merchant misrepresented the terms of sale. [emphasis added]
20. The Visa Rules set out a number of potential scenarios that must be met for Reason Code 53. The only scenario that is potentially applicable to Aeon’s claim is referred to as “Condition 5” in the Visa Rules. It applies when “…[t]he Cardholder claims that the terms of sale were misrepresented by the Merchant.” The other scenarios, which are not applicable, require that the Cardholder cancelled or returned applicable merchandise or services, or require a finding that merchandise (not services) were counterfeit.
21. Among other limits imposed, for chargebacks under Reason Code 53 (Condition 5), the Visa Rules impose the following time limit for the chargeback: 120 calendar days from the last date the Cardholder expected to receive the merchandise or services or the date on which the Cardholder was first made aware that the merchandise or services would not be provided, not to exceed 540 calendar days from the Transaction Processing Date.
22. This time period is consistent with the second time period applicable to Reason Code 30.
23. There is another Reason Code, Reason Code 57 – Fraudulent Multiple Transactions – that expressly applies to fraud. However, this Reason Code is not applicable to Aeon’s claim because it only applies to transactions put on a cardholder’s credit card “without the Cardholder’s permission” and where the “Cardholder denies authorizing or participating in the disputed Transaction”. Under the Visa Rules, Aeon authorized all the transactions at issue in its claim.

Aeon’s Retainer of Steven Mann

[11] Ortino provides the following evidence regarding his retainer of Steven Mann:

• In September 2012, Mann approached Ortino on LinkedIn. Mann stated that he was a paralegal and offered to pursue unpaid contractor claims and defend actions against Aeon through his sole proprietorship Due Process Legal Services (“Due Process”);
• On September 13, 2012, Aeon signed a three-page Retainer Agreement with Due Process that amongst other things states:
  • Aeon retains Due Process to represent it in connection with ten cases in the Small Claims Court which will involve issuing demand letters, filing a Statement of Claim, motions and affidavit; attending settlement conferences and trial dates as well as enforcement;
  • Fees were based principally on time spent at a rate of $75 per hour. Fees excluding disbursements were estimated to be $10,000.00;
  • A retainer of $2,500 was required to be paid to Due Process;
• Aeon provided Mann with additional claims to be pursued on behalf between 2012 and 2015. A new retainer agreement was signed in respect of these additional claims;
• Mann introduced Ortino to “Caroline Brett” who he described as a lawyer that was working for him and could litigate any matter in the Ontario Superior Court of Justice;
• Ortino was convinced that Mann was performing legal services for him as he received:
  • Payments from Mann that he claimed were settlement funds or court awards;
  • Updates from Mann regarding the status of various actions as well as court documents such as Notices of Examination and Orders;
  • Angry telephone calls from purported defendants after they received demand letters from Mann;
• No one associated with Aeon ever attended a court event related to any of the files on which it was represented by Mann;
• Ortino paid the vast majority to Mann’s invoices using the Visa Card;
• In 2015, Mann advised Ortino that he had graduated law school and was now working as a licensed lawyer for ZHM Group. Mann advised that their arrangement would have to change as ZHM only worked on a contingency basis.
• On November 2, 2015, Ortino signed a Contingency Fee Retainer Agreement which states that the contingency fee to be paid by the client is equal to 30% of all amounts recovered on behalf of the client excluding disbursements and partial indemnity costs:
  • “The initial 10% is due and paid in full upon initial filing of the claim”;
  • “Max initial retainer amount is 10% of $300,000 anything over that amount the 30% is paid out upon winning”;
  • “Total payout for Superior Court is always 30% of total amount”;
  • “Total payout for a Small Claims Court is 20% of the total amount”

Aeon Discovers and Reports Fraud

[12] After several years and no financial recovery, Ortino eventually suspected that Mann was delivering invoices for work that he had not performed. Ortino’s affidavit provides that following particulars:

• Mann would periodically send Ortino invoices for the work that had not occurred such as a trial that had not yet happened since no one at Aeon had testified at a trial;
• On a few occasions in mid-2015, Mann charged the Visa Card despite not delivering an invoice or making a specific request for funds. When confronted, Mann would quickly deliver another invoice that reflected the reasons for the charge;

[13] Sometime during the week of April 11, 2016, Ortino checked the status of his claims by attending the Toronto Small Claims Court. He learned that Mann had never filed any claims on behalf of Aeon. Ortino also learned that Mann was never licensed to practice as a paralegal or a lawyer in Ontario. By this point, Aeon had paid Mann a total of $432,814.62.

[14] As soon as he discovered this fraud, Ortino states that he contacted RBC to advise it that he would be disputing all payments made by Aeon to Mann, Due Process and/or ZHM.

[15] According to the affidavit evidence of Cheong, her review of RBC’s records shows that Ortino first contacted RBC in late April, 2016.

[16] Sarah Ann Drouin-Perry (“Drouin-Perry”), Disputes Advisor, at RBC, was initially Ortino’s primary contact at RBC. They exchanged emails between April 27, 2016 and May 5, 2016. The emails reflect that Drouin-Perry diligently sought to obtain details from Ortino regarding the disputed transactions as quickly as possible on April 27, 2016 – April 29, 2016. On April 30, 2016, Drouin-Perry referred Aeon’s chargeback claim to a RBC Subject Matter Expert and Supervisor.

[17] Ortino sent the following email to Drouin-Perry on May 5, 2016: The services required from this fraudulent lawyer was to file the court cases and show up in court when the cases were ready to go to trial. For two years he was telling us that he was doing all this and would invoice us and hand in fake court filing that he told us were real. He wouldn’t tell us the court dates because there were no court dates. Now we know why he would tell us he had already went to court and we won, or defendants appealed, or he had to file a motion to dismiss the appeal. He continued this game for 2014 and 2015. Attached you will see his invoice and email from March 11, 2015 for you to show to Visa. I did report to Visa within the 120 days of finding out about the Fraud and that’s why I meet the criteria of going back 493 days of the transaction. Visa doesn’t know that because all they see is his last fraud transaction date in December of 2015. Please show them that Due Process (Steven Mann) continued to “fake work” with us all winter of 2016 and invoiced me March 11, 2016. I will attach his emails and “fake invoice”. He probably tried to put through the Visa payment sometime in March or April after he emailed me that last invoice because I cancelled my cards and applied for new numbers the first week of April. Please check that from your end and if it’s true then you can show that to Visa as well to prove I am within 120 days of realizing its fraud. … Thank you for your help Sarah. We need to show Visa I did report the fraud within 120 days of realizing it is a fraud so we can go back 493 days. …

[18] Also, on May 5, 2016, Maxime Berube Jarry, Disputes & Cards Specialist, RBC, sent the following email to Ortino: Please provide us with a detailed letter explaining and indicating all transactions to be disputed with corresponding case details and with the respective court dates that were provided to you by the merchant. …

[19] On May 5, 2016, Ortino responded. Although he did not provide a list of disputed transactions he stated: … He never indicated court dates on his invoices because he would tell us that he had already went to court and give us updates … either Aeon Sodding won, or the defendants appealed, or he had to file a motion to dismiss the appeal.

[20] On May 9, 2016, Jessica Kottoor (“Kottoor”), Subject Matter Expert, RBC, requested the following information from Ortino: … A detailed letter of explanation outlining exactly what services Due Process Legal was to provide to you and your company [and] any additional transaction details that are within the 540 days along with their respective invoices.

[21] Ortino responded on May 10, 2016 and provided the following invoices to Kottoor: 1) 11 invoices dated August 27, 2014; 2) seven invoices dated September 30, 2014. These were the only invoices provided by Aeon to RBC.

[22] The invoices are similar in format in that they show specific docketed time for specific tasks. For instance, an invoice dated August 27, 2014 from Due Process to Aeon states: Re: EMPIRE WYNFIELD – Motion to Dismiss Document review and prep 3.28 @$75/hr $246 Tort Law Research 2.43 @$75/hr $182.25 Case Law Research 2.11 @$75/hr $158.25 Preparation for trial 5.38 @$75/hr $403.50 Trial 3.75 @$75/hr $281.25 Various discussion w/ counsel .49 @$75/hr $36.75 Court Document Prep 3.81 @$75/hr $285.75 MY FEE: $1593.75 TOTAL FEE: $1593.75 DISBURSEMENTS Photocopies/paper work $47.75 … Process Fee $35.00 Total $82.75

[23] On May 13, 2016, Kottoor asked Ortino: Would it be a correct statement to say that each transaction processed on your RBC Visa Credit Card is for a service that was rendered prior to the actual transaction date? Simply put, we need to confirm whether any of the transactions represent full or partial advance payments for services that were or will be provided after the corresponding transaction date.

[24] On May 23, 2016, Ortino responded: All of the transactions processed by Due Legal Process on my RBC Visa were for services that were in progress. Either filing our cases in court, filing an appeal, filing a motion to dismiss, filing enforcements, etc.…. So yes, all the processed transactions represented either full or partial “retainer” payments for services that were to be provided during and after the corresponding transaction date. A perfect example of that would be the last invoices Steve emailed us for the fraudulent Empire Homes “defense” in March of 2016. He was invoicing us to file a defense, which was going to happen that week and invoicing for a motion to dismiss Empire Home’s appeal to our defense which he said would happen a couple of weeks later. …

[25] No payments were made by Aeon to Due Diligence Legal in 2016. Further, as Ortino confirmed on cross-examination, the Empire Homes invoice was never paid using the RBC credit card and thus any invoices issued in 2016 are not probative of invoices for future work having been invoiced during the 2014-2015 period at issue.

[26] On May 24, 2016, Kottoor wrote to Visa Inc. for assistance with Aeon’s chargeback request. She asked: … Seeing as the services were never truly rendered by the merchant and our cardholder was provided with worthless documents, are we still able to pursue a chargeback, under either RC 30 or RC 53 for all the transactions within 540 days using April 29th, 2016 as our “service date” seeing as this is the date for which our cardholder was made aware that no cases were opened within the Courts?

[27] Craig Malmstron, Sr. Dispute Analyst, Global Dispute Support, Visa Inc, responded on May 25, 2016: Chargeback Reason Code 30 appears to be best suited for your dispute inquiry. This chargeback reason code can be used when your cardholder expected to receive the merchandise or services but the merchant was not able to provide them by the date and time promised. The chargeback time limit for this reason code is 120 calendar days from the promised date of service not to exceed 540 calendar days from the Transaction processing date. Your email below did not say when the service was to be provided. I would add that if this service was to file the documents with the court between October, 205 and January 25, 2016, this dispute is now past the time limit of 120 calendar days from the promised date of service to dispute as a charge back. Because this is a high dollar amount dispute, I would advise you to obtain documentation that supports when the merchant claimed that the documents were filed with the court to confirm your chargeback time limit. …

[28] Kottoor responded on May 25, 2016: We are seeking further confirmation and clarification, seeing as this is a very high dollar amount for potential Chargebacks. In 2014, 2015 and the first quarter of 2016, the merchant was hired by our cardholder to pursue all unpaid invoices owing to our cardholder. The merchant was to perform all regular lawyer work, researching, filing and representing our cardholder in court for all cases given to the merchant by our cardholder. The merchant was to communicate with our cardholder regarding all winnings, losses, appeals, judgments, enforcements, etc. and all else related to Court outcomes regarding the cases. The merchant was to invoice our cardholder in stages per case and continue court appearances where and when required. As previously mentioned, our cardholder was advised on April 29, 2016 by both the Superior Court of Justice and the Small Claims Court that no documentation was ever filed with the Courts therefore we would like to confirm whether we can use the date of April 29th as our service date. Seeing as our cardholder obtained a neutral 3rd party on May 23rd, 2016 who has assessed all the documentation that our cardholder has been provided by the merchant and has determined that our cardholder does not have any matters before the court and the said work provided was not done by a licensed legal professional – would RC53 be better suited for this case as the understanding between the cardholder and the merchant was to provide the aforementioned services?

[29] Malmstrom responded on May 25, 2016: … Your center would use Reason Code 30 [if] no service was rendered by this merchant and your center would use Reason Code 53 Condition 4 if the legal service rendered by this merchant was performed but not performed according to industry standards. The time limits for both reason codes are the same. Because this is a very high dollar amount dispute, I would advise your center to gather further information from your cardholder at this time quickly due to the age of the Transactions before you pick a reason code. You should start by asking the cardholder:

1. Did the merchant perform any service? (If the answer is no, use Reason Code 30)
2. If the merchant did perform a service please clarify what service the merchant performed?
3. Was the service that was performed by the merchant not done according to industry standards? (If you can support this claim with a written third-party opinion your center would then use Reason Code 53 condition 4). In closing, please remember your reason code 30 and 53 condition 4 time limits is 120 calendar days from the promised date of service not to exceed 540 calendar days from the Transaction processing date. Also, if you use Reason Code 30 be sure to support the chargeback with a very detailed description of all the services the merchant was to perform for the 300,000 CAD.

[30] By letter dated August 11, 2016, Stephanie Bonnar, Client Care Specialist, at RBC advised Aeon that its chargeback request had been declined: I am writing this letter in response to your correspondence regarding disputed transactions from the merchant, Due Process Legal in the amount of $309,224.15. RBC’s Client Care Centre is responsible for addressing client concerns, and as such, your issue has been referred to me for investigation and response. The Canadian governing body for your credit card is the governing board by which all Canadian Financial Institutions offering their credit cards are bound. As such, RBC must adhere to the operating guidelines outlined by them. When purchasing goods or services with your credit card, it is only a method of payment, and not a guarantee of satisfaction with the merchandise/service or merchant. As such, any and all claims you may have with a purchase must be settled directly between you and the merchant, as stipulated in your Cardholder Agreement section Problems with a Purchase. In some circumstances however, we may be able to provide assistance in resolving disputed transactions. You initially contacted the Cards Dispute Department in April 2016 regarding the charges from Due Process Legal and were advised to provide all your documentation regarding the dates for series were to be provided as well as the amounts. At that time, you were advised the documents would need to be reviewed and you would be contacted regarding the outcome. On May 2, 2016 you spoke with a Dispute Team Manager who informed you that unfortunately RBC could not dispute the charges as they were past timeframe. On May 9,2016 following your telephone conversation with Jessica, a Dispute Department Subject Matter Expert, she attempted to escalate your concerns to the international governing body for further review. Regrettably they advised that we were past the timeframe to intervene on your behalf. However, this does not mean that you have no options. If the merchant will not satisfy your concern to your satisfaction, you may want to consider pursuing the issue through legal channels concerning the merchant, Due Process Legal’s ethics and integrity. …

[31] In November, 15, 2017, Aeon commenced an action against Mann, Due Process Legal and ZHM in the amount of $1,472,517.72 plus costs. Aeon was awarded $472,517.72 on account of fees paid for legal work not performed. It was also awarded $1 million in damages for third party claims that could no longer be pursued by Aeon given that were statute-barred by the time that Mann’s fraud was discovered. Aeon has been unable to recover any funds from Mann.

ANALYSIS

ISSUE #1: IS THIS AN APPROPRIATE CASE FOR SUMMARY JUDGMENT?

[32] Rule 20.04(2) 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.

[33] In Hryniak v. Mauldin, 2014 SCC 7, 1 S.C.R. 87 at para. 49, the Supreme Court of Canada stated that: There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[34] Rule 20.04(2.1) provides that in determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

[35] In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial: see Rule 20.02(2). Each side must “put its best foot forward” and the court is entitled presume that the evidentiary record is complete and that there will be nothing further if the issue were to go to trial: Broadgrain Commodities Inc. v. Continental Casualty Company, 2018 ONCA 438, at para. 7.

[36] This motion proceeded on the basis of several volumes of documentary evidence filed by both parties including the affidavits referenced above and the transcripts from the cross-examination of the affiants.

[37] In my view this is an appropriate case for summary judgment. Whether RBC took all reasonable steps to assist Aeon with its chargeback claim is a matter that the parties were able to address given the extensive documentary record and the cross-examinations that were held.

ISSUE #2: DID RBC BREACH ITS OBLIGATION TO ASSIST AEON IN RESOLVING ITS DISPUTED TRANSACTIONS?

[38] The Agreement states: Problems with a Purchase If you have problems with anything you buy using your Credit Card or your Account number, you must pay the amount owing on your Account and settle the problem directly with the store or merchant. In some circumstances, we may be able to provide assistance in resolving disputed transactions. …

[39] I also accept Aeon’s submission that “… a bank is generally required to exercise reasonable care in following the customer’s instructions and performing its banking functions”: Alison R. Manzer & Jennifer Wasylyk, The Corporate Counsel Guide to Banking & Credit Relationships, Second Edition, Thomson Reuters, 2016, page 37. Banks are required to exercise reasonable care in following a customer’s instructions in other areas, such as acting on a client’s request to stop payment on a cheque: Remfor Industries Ltd. v. Bank of Montreal (1978), 21 O.R. (2d) 225 (C.A.). Although counsel advise that there are no cases on point, I find that it is commercially reasonable to imply a term in the Agreement that requires an Issuer to exercise reasonable care in acting on a Cardholder’s request for a chargeback.

[40] I am satisfied that RBC exercised reasonable care in acting on Aeon’s request for a chargeback. As outlined earlier, its representatives responded quickly to Aeon’s chargeback claim. They made numerous requests to Ortino for information regarding the services provided, the service dates and other transaction details. RBC had no pecuniary interest in the outcome of this chargeback claim since if the claim was approved then the loss would have been borne by the Acquirer which, in this case, was not RBC. It is clear from the record that RBC not only attempted to assist Aeon but also attempted to advance its interests by considering whether more than one Reason Code might provide a remedy in this unusual situation.

[41] Although it was attempting to assist Aeon, RBC was nevertheless under a duty to fairly apply the Visa Rules. RBC acted reasonably in seeking the views of a senior dispute analyst at Visa Inc. Given the information that was provided by Aeon to RBC (which did not include the Retainer Agreements referenced earlier), it was reasonable for Aeon to come to the conclusion that Reason Code 30 was applicable and that the claims had been made beyond the permitted time period.

[42] Accordingly, I dismiss Aeon’s claim in breach of contract against RBC.

ISSUE #3: DOES THE VERIFICATION CLAUSE FOUND IN THE AGREEMENT BAR THE PLAINTIFF’S CLAIM?

[43] There is no dispute that the following material terms have not been amended in the intervening years: Your Visa Statement Each month we will provide you with your Statement. … It is up to you to review your Visa Statement and to check all transactions, interest charges and fees. If you think that there is an error on your Visa Statement, you must contact us. If you do not contact us within 30 days of the last day of the relevant statement period, the Visa Statement and our records will be considered correct and you may not later make a claim against us in respect of any charges on the Visa Account. …

[44] As noted by the Ontario Court of Appeal in Bunan v. Toronto-Dominion Bank, 2015 ONCA 226, at para. 28: Courts have repeatedly held that verification agreements may constitute a complete defence to a claim of unauthorized transactions: Arrow Transfer Co. v. Royal Bank of Canada, [1972] S.C.R. 845; and Don Bodkin Leasing Ltd. v. Toronto-Dominion Bank, 40 O.R. (3d) 262 (C.A.).

[45] In Don Bodkin Leasing Ltd. v. Toronto-Dominion Bank, [1998] O.J. No. 2241, the Ontario Court of Appeal considered a verification clause. The Ontario Court of Appeal stated: In any event, the express words of the verification clause released the Bank from "all claims" in respect of any item in the statement and this would include a claim based on breach of contract. In our view, it does not matter whether the conduct of the Bank in turning over the statements and cheques to Williams could be characterized as "negligent". There is no ambiguity in the verification clause. It releases the Bank from all claims by the customer in respect of any and every item in the statement.

[46] Aeon was in the best position to discover Mann’s fraudulent activities. There were many indicators of fraudulent activity over the more than three year period that Mann worked for Aeon including: (1) Mann’s failure to recover and deliver any funds from the actions that were commenced despite having been billed hundreds of thousands of dollars; (2) the failure of any representative of Aeon to be requested to attend a trial and other court proceedings even though Mann had reported that such proceedings had been held; (3) invoices that made little sense, such as the invoice described above with the heading “Empire Wynfield - Motion to Dismiss” which nevertheless contains a line item for time preparing for a trial and time at a trial.

[47] To narrowly construe the verification clause would lead to a commercially unreasonable result by shifting the risk of loss from Aeon who was in a better position to detect fraudulent activity than RBC who was not privy to the dealings between Aeon and Mann.

[48] I find that the verification clause is a complete bar to Aeon’s claim.

CONCLUSIONS

[49] Aeon’s claim is dismissed. I encourage the parties to make every effort to come to an agreement on costs, failing which they may deliver written costs submissions to a maximum of five pages each exclusive of a Bill of Costs and settlement offers. RBC shall deliver its costs submissions by August 10, 2020. Aeon shall deliver its responding costs submissions by August 17, 2020. RBC shall deliver its reply submissions by August 24, 2020.

Mr. Justice M. Faieta Released: July 24, 2020

COURT FILE NO.: CV-16-566471 DATE: 20200724

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

AEON SODDING CORP. Plaintiff – and – THE ROYAL BANK OF CANADA Defendant

REASONS FOR DECISION Mr. Justice M. D. Faieta Released: July 24, 2020