COURT FILE NO.: CV-18-597047
DATE: 20201009
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ROYAL BANK OF CANADA, Plaintiff
AND:
1898936 ONTARIO INC. and HOMAYOUN BALALAEY, Defendants
BEFORE: Justice Glustein
COUNSEL: Michael J. Brzezinski, for the plaintiff
Esmaeil Mehrabi, for the defendant Homayoun Balalaey
HEARD: October 1, 2020
reasons for decision
Nature of issues and overview
[1] The plaintiff, Royal Bank of Canada (RBC), brings this motion for summary judgment in the present action against the defendant 1898936 Ontario Inc. (189) for the amount of $73,475.28[^1] allegedly owing under:
(i) a small business financing loan agreement executed on October 27, 2014 (the SBFL Agreement) under which RBC provided a variable rate term facility in the principal amount of $200,000, with interest at RBC’s prime rate plus 3% per annum, and
(ii) two credit facilities collectively for $15,000 executed on October 27, 2014 for: (a) a “revolving demand facility in the amount of $5,000.00, available by way of Overdraft”, with interest at RBC’s prime rate plus 5% per annum, and (b) “VISA business to a maximum of $10,000.00”, pursuant to RBC’s VISA Business Card Agreement (collectively, the VISA Agreement).[^2]
[2] RBC also seeks summary judgment against the defendant Homayoun Balalaey (Balalaey) for liability under personal guarantees he signed on October 27, 2014. Balalaey signed (i) a guarantee in the principal amount of $50,000 with interest at RBC’s prime rate plus 3% per annum, as security for 189’s small business financing loan (the SBFL Guarantee), and (ii) a guarantee in the principal amount of $15,000 with interest at RBC’s prime rate plus 5% per annum, as security for 189’s VISA Agreement obligations (the VISA Guarantee) (collectively, the Guarantees). The combined value of the Guarantees is $65,000, which collectively secure all of 189’s obligations to RBC.
[3] Consequently, RBC seeks judgment against Balalaey in the principal amount of $65,000 plus interest as set out in the respective guarantees.
[4] 189 did not respond to this motion and did not retain new counsel after 189’s prior counsel was removed as lawyer of record, contrary to the order of Master Short under Rule 15.04(7) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[5] Balalaey opposes the summary judgment motion. He acknowledges signing the Guarantees. However, Balalaey submits that there is a genuine issue requiring trial that RBC was not entitled to demand payment from 189 on the loans (nor demand payment from Balalaey on the Guarantees) because:
(i) 189 is not in default of its obligations; and
(ii) Even if 189 is in default of its obligations, RBC failed to provide (a) reasonable notice of its intention to enforce a security, (b) reasonable time to pay following its notice of intention to do so or (c) notice on which 189 might reasonably expect to be able to act, as required under Royal Bank of Canada v. W. Got & Associates Electric Ltd., 1999 CanLII 714 (SCC), [1999] 3 S.C.R. 408.
[6] At the hearing, RBC submitted, in the alternative, that if the court found a genuine issue requiring trial with respect to the Guarantees, the court should still (i) grant partial summary judgment for the claim against 189 since it did not respond to the motion or (ii) strike the defence of 189 under Rule 15.04(7).
[7] For the reasons that follow, I find that there is a genuine issue requiring trial with respect to RBC’s claim against both 189 and Balalaey. In brief:
(i) RBC’s receipt of a Request to Pay dated March 2, 2018 (RTP) from Canada Revenue Agency (CRA) may not establish that 189 was in default, since there is a genuine issue requiring trial that (a) CRA sent the RTP in error; (b) 189 resolved that error and paid CRA; (c) at no time was 189 in arrears of its payments to RBC under the SBFL and VISA Agreements; and (d) RBC has refused to accept payments from 189 even though 189 has been willing and able to resume making payments to RBC until the entire amount of the debt is paid off; and
(ii) Even if the RTP constitutes an event of default, there is a genuine issue requiring trial as to whether RBC failed to provide reasonable notice as required under the Got principles.
[8] I dismiss RBC’s request to either grant partial summary judgment against 189 or strike its defence under Rule 15.04(7). In summary:
(i) Given that the basis for Balalaey’s defence is that 189 is not in default and did not receive reasonable notice, it would not be appropriate to grant summary judgment against it, based on the principles in Mason v. Perras Mongenais, 2018 ONCA 978, and Butera v. Chowns, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561. The same issues as to the effect of the RTP and reasonable notice would be before the court at trial even if partial summary judgment was granted. Consequently, those issues cannot be readily bifurcated;
(ii) In any event, there would be no “advancement achieved in terms of the action as a whole by rendering partial summary judgment in this case”: Mason, at para. 39; and
(iii) I would not exercise my discretion to strike the defence under Rule 15.04(7) since (a) the issues of whether 189 was in default or whether RBC provided 189 with reasonable notice would have to be addressed by the trial judge regardless of whether 189 is represented, given Balalaey’s defence; and (ii) in any event, Balalaey’s counsel agreed at the summary judgment hearing to act for 189.
[9] Concurrent with the present motion, RBC brought a summary judgment motion against 2414973 Ontario Limited o/a Tandis Fine Food (Tandis), Mohammad Bezkool (Bezkool) and Balalaey in Court File No. CV-18-592837 (the Tandis Action), seeking payment (i) for monies advanced to Tandis[^3] and (ii) on guarantees signed by Balalaey and Bezkool.
[10] While the matters in both actions are related in that the loans and guarantees were all executed concurrently on October 27, 2014, the issues raised in each action are different. Consequently, I release a separate set of reasons in the Tandis Action concurrently with these reasons.
Facts
Background facts
[11] 189 is an Ontario corporation which operates a take-out counter for a restaurant located at 100 Steeles Avenue West, Unit 23, in Thornhill, Ontario.
[12] Balalaey is the sole officer, director and shareholder of 189.
The loan agreements and guarantees
(i) The loan agreements
[13] On October 27, 2014, RBC and 189 entered into the SBFL Agreement. Under the section in the SBFL Agreement entitled “Credit Facilities”, RBC agreed to provide a “variable rate term facility in the amount of $200,000.00”, with monthly principal repayments of $3,508.77 plus interest at the RBC prime rate plus 3% per annum, based on a 60 month amortization. The term of the SBFL Agreement was for 60 months.
[14] The SBFL Agreement indicated that Balalaey would personally guarantee $50,000, which was equivalent to 25% of the $200,000 loan. Under the section in the SBFL Agreement entitled “Security”, RBC stated that its security for the SBFL “and all other obligations of the Borrower to the bank” included a “Guarantee … in the amount of $50,000.00 signed by HOMAYOUN BALALAEY” [block letters in original].
[15] Consequently, the $50,000 SBFL Guarantee secured the 189 loan obligations under the SBFL Agreement and all other 189 obligations to RBC.
[16] Under the standard terms of RBC’s “Loan Agreement – CSBFL”, included as part of the SBFL Agreement, RBC was entitled upon an “event of default” “in its sole discretion, to cancel any Credit Facilities, demand immediate repayment in full of any amounts outstanding under any term facility, together with outstanding accrued interest and any other indebtedness under or with respect to any term facility, and to realize on all or any portion of any Security”.
[17] An event of default under those standard terms included “(a) failure of the Borrower to pay any principal, interest or other amount when due pursuant to this Agreement”, and “(c) the Borrower, or the Guarantor if applicable, is unable to pay its debts as such debts become due, or is, or is adjudged or declared to be, or admits to being, bankrupt or insolvent”.
[18] Under the SBFL Agreement, 189 is responsible for paying all costs incurred by RBC as a result of default under the agreement, including legal fees.
[19] Under the VISA Agreement, there were two “credit facilities”: (i) a “revolving demand facility in the amount of $5,000.00, available by way of Overdraft”, with an interest rate of prime plus 5% per annum, and (ii) “VISA business to a maximum of $10,000.00” governed by a separate VISA card agreement which was included in the signed documents.
[20] Under the section in the VISA Agreement entitled “Security”, RBC stated that its security for the credit facilities “and all other obligations of the Borrower to the Bank” included a “Guarantee … in the amount of $15,000.00 signed by Homayoun Balalaey”.
[21] Consequently, the $15,000 VISA Guarantee secured the 189 obligations under the VISA Agreement and all other 189 obligations to RBC. Under the SBFL and VISA Agreements, Balalaey personally guaranteed $65,000 collectively for all of 189’s obligations to RBC.
[22] Under the standard terms of RBC’s “Loan Agreement”, included as part of the VISA Agreement, RBC was entitled upon an “event of default”, “in its sole discretion, to cancel any Credit Facilities, demand immediate repayment in full of any amounts outstanding under any term facility, together with outstanding accrued interest and any other indebtedness under or with respect to any term facility, and to realize on all or any portion of any Security”.
[23] An event of default under those standard terms included “(a) failure of the Borrower to pay any principal, interest or other amount when due pursuant to this Agreement”, and “(c) the Borrower, or the Guarantor if applicable, is unable to pay its debts as such debts become due, or is, or is adjudged or declared to be, or admits to being, bankrupt or insolvent”.
[24] Under the VISA Agreement, 189 is responsible for paying all costs incurred by RBC as a result of default under the agreement, including legal fees.
(ii) The Guarantees
[25] As noted above, as security for the SBFL and VISA Agreements, it is not contested that Balalaey signed two personal guarantees in the amount of $50,000 and $15,000. These documents were also executed on October 27, 2014.
[26] The Guarantees were not limited to any particular loan agreement. The agreements provided that the Guarantees were for “all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by 1898936 ONTARIO INC. … to the Bank” [emphasis and block letters in original text].
[27] Under the SBFL Guarantee, the liability of Balalaey was “limited to the sum of $50,000.00 … together with interest thereon from the date of demand for payment at a rate equal to the Prime Interest Rate of the Bank plus 3.000 Three percent per annum as well after as before default and judgment” [emphasis in original text].
[28] Under the VISA Guarantee, the liability of Balalaey was “limited to the sum of $15,000.00 … together with interest thereon from the date of demand for payment at a rate equal to the Bank’s Prime Interest Rate plus 5.00 percent per annum as well after as before default and judgment” [emphasis in original text].
[29] Consequently, under the SBFL and VISA Guarantees, Balalaey personally guaranteed $65,000 collectively for all of 189’s obligations to RBC.
[30] Both Guarantees contained a “non-recourse” provision, under section 3:
The Bank shall not be bound to exhaust its recourse against [189] or others or any securities it may at any time hold before being entitled to payment from the undersigned of the Liabilities. The undersigned renounce(s) to all benefits of discussion and division.
[31] Both Guarantees also contained an “entire agreement” or “no representation” clause, at section 13:
This instrument covers all agreements between the parties hereto relative to this guarantee and assignment and postponement, and none of the parties shall be bound by any representation or promise made by any person relative thereto which is not embodied herein.
Subsequent events
(i) The transfer of the account
[32] 189 was never in arrears of payment under either the SBFL or VISA Agreements.
[33] Nevertheless, on August 10, 2017, the 189 account was transferred to Kevin Leung of RBC’s Special Loans and Advisory Department. The transfer was only made due to Tandis’ poor performance, since Balalaey also owned Tandis.
(ii) The RTP
[34] On March 2, 2018, CRA issued the RTP to both RBC and 189. CRA demanded payment of outstanding monies due from 189 under the Excise Tax Act, R.S.C. 1985, c. E-15, in the amount of $18,343.15.
[35] The uncontested evidence of Balalaey is that CRA issued the RTP in error. He states in his affidavit:
[T]he RTP was sent in error due to a mix-up with CRA as to which account [189’s] tax payments would be deducted from. I notified CRA of this error, and the payment issue was fixed.
(iii) RBC demands payment of the loans and Guarantees
[36] Balalaey’s uncontested evidence is that upon receipt of the RTP, RBC demanded payment under the SBFL and VISA Agreements and the Guarantees even though (i) CRA had been notified of the account error issue, and (ii) 189 paid the amounts owed under the Excise Tax Act.
[37] I state Balalaey’s evidence on this issue in full, as it is brief and uncontested:
Despite this [payment] issue being resolved with the CRA, RBC decided to call up the loan and freeze [189’s] account, notwithstanding that [189] was never in arrears of its payment under the terms of the [SBFL] Agreement nor the VISA Agreement. [189’s] account with RBC was eventually unfrozen, but RBC refused to take any payments and continued with the default proceedings.
[189] is willing and able to resume making payments to RBC until the entire amount of the debt is paid off.
[38] On March 12, 2018, RBC froze 189’s account. Sufficient funds were added to the account such that RBC unfroze the account, and RBC paid the amounts owing to CRA on July 23, 2018 from 189’s account. There were remaining funds in the account after the payment.
[39] On April 6, 2018, RBC (through its counsel) issued demand letters to (i) 189 for payment of all amounts outstanding under the SBFL and VISA Agreements and (ii) Balalaey for payment of all amounts outstanding under the Guarantees. RBC gave a deadline of 10 days (until April 16, 2018) for full payment. The demand letters did not state how the account fell into default.
[40] On April 6, 2018, RBC also issued a Notice of Intention to Enforce Security to 189 pursuant to section 244(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3.
[41] Prior to issuing its demand letters or the Notice of Intention to Enforce Security, RBC did not give 189 or Balalaey any notice of 189’s alleged default, nor did it advise 189 of the RTP.
[42] On May 2, 2018, RBC issued a statement of claim seeking payment of (i) from 189 for the outstanding indebtedness under the SBFL and VISA Agreements and (ii) from Balalaey under the Guarantees.
(iv) Failure to respond to the motions and appoint new counsel
[43] The summary judgment motions in the present action and in the Tandis Action were originally returnable before Justice Sossin on July 9, 2019. However, on the hearing date, prior counsel for the defendants advised the court that his firm had scheduled motions for July 18, 2019 to get off the record in both action for Tandis, 189 and Balalaey. In reliance on the advice of counsel, Justice Sossin adjourned the motions to December 2, 2019, on the following terms:
(i) The defendants were to retain new counsel by August 15, 2019;
(ii) The defendants were to deliver their responding motion materials by September 5, 2019; and
(iii) RBC was granted its costs thrown away.
[44] On July 18, 2019, Master Short issued orders in both the Tandis Action and the 189 Action removing prior counsel for the defendants as lawyers of record. Master Short’s orders further provided that the defendants had 30 days from the date of being served with the orders to appoint a new lawyer or, in Balalaey’s case, deliver a notice of intention to act in person, failing which the court may strike their statements of defence.
[45] The summary judgment motions were brought before me on December 2, 2019. At that time, none of the defendants had retained counsel. Balalaey sought a brief adjournment to retain counsel, since he had not been able to do so despite his best efforts. I granted the adjournment until January 10, 2020 and remained seized of the motions.
[46] After Balalaey retained counsel on December 7, 2020, RBC sought a further adjournment to prepare reply materials. The motions were adjourned to April 3, 2020 and then later adjourned as a result of the COVID-19 pandemic.
[47] Neither Tandis nor 189 delivered notice that they retained a new lawyer nor did they deliver responding material to the motions.
Analysis
The general principles applicable to the law of summary judgment[^4]
[48] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, the court held that summary judgment is only appropriate where it leads to “a fair process and just adjudication”: at para. 33. A judge can grant summary judgment only if the process “gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute”: at para. 50. The evidence before the court “must be such that the judge is confident that she can fairly resolve the dispute”: at para. 57.
[49] In the recent decision of Mason, the Court of Appeal reiterated the caution that “the overriding principle [is] that summary judgment is only appropriate where it leads to ‘a fair process and just adjudication’”: at para. 44. The court further held, at para. 44:
Certainly there is nothing in Hryniak that suggests that trials are now to be viewed as the resolution option of last resort. Put simply, summary judgment remains the exception, not the rule.
[50] In Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, the court cautioned against reliance on a documentary record when the credibility of an affiant can be determinative at trial. The court held, at para. 44:
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.
[51] In Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, aff’d 2014 ONCA 878, Justice Corbett reviewed the process by which the court considers whether summary judgment is appropriate. He stated, at para. 33:
[T]he court on a motion for summary judgment should undertake the following analysis:
The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;
On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;
If the court cannot grant judgment on the motion, the court should:
a. Decide those issues that can be decided in accordance with the principles described in 2) above;
b. Identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues;
c. In the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion.
[52] A responding party on a motion for summary judgment is entitled to rely on the evidence put before the court by the moving party: Pereira v. Contardo, 2014 ONSC 6894, 123 O.R. (3d) 271, at paras. 41 and 43.
The general principles applicable to the availability of partial summary judgment
[53] The Court of Appeal in both Mason and Butera have affirmed that partial summary judgment is a “rare procedure”: Mason, at para. 22; Butera, at para. 34.
[54] Under the test in Mason and Butera, partial summary judgment can only be obtained if the court is satisfied that there is an “issue or issues” that (i) “may be readily bifurcated from those in the main action” and (ii) “may be dealt with expeditiously and in a cost effective manner”: Mason, at para. 22, Butera, at para. 34.
[55] The first requirement avoids the risk of inconsistent judgments on factual issues at trial, and ensures that the trial judge has a full appreciation of the facts: Mason, at para. 23.
[56] The second requirement engages the gatekeeper role of the court to ensure that partial summary judgment is only permitted if it is a cost-effective process that promotes judicial economy. Consequently, partial summary judgment will not be appropriate if “there does not appear to be any advancement achieved in terms of the action as a whole by rendering partial summary judgment”: Mason, at para. 39.
[57] The court must consider the concerns of “delay, added expense, [and] the unproductive use of scarce judicial resources” when assessing suitability for partial summary judgment: Mason, at para. 41.
The general principles applicable to the requirement for a creditor to give reasonable notice of its intention to enforce a security and reasonable time to pay following any notice of intention to do so
[58] In Got, the Supreme Court of Canada affirmed the principle that a creditor is required to give a debtor reasonable notice of its intention to enforce a security, and reasonable time to pay following any notice of intention to do so. A debtor “must be given ‘some notice on which he might reasonably expect to be able to act’”. The court held, at para. 18:
According to this Court's decision in Lister (R.E.) Ltd. v. Dunlop Canada Ltd., 1982 CanLII 19 (SCC), [1982] 1 S.C.R. 726, the bank was required to give the debtor reasonable notice of its intention to enforce the security and reasonable time to pay following this notice of intention. The debtor must be given “some notice on which he might reasonably expect to be able to act”: Massey v. Sladen (1868), L.R. 4 Ex. 13, at p. 19.
[59] When determining the length of time that would amount to “reasonable notice”, the court set out the following criteria, at para. 18 (quoted verbatim):
(1) the amount of the loan;
(2) the risk to the creditor of losing his money or the security;
(3) the length of the relationship between the debtor and the creditor;
(4) the character and reputation of the debtor;
(5) the potential ability to raise the money required in a short period;
(6) the circumstances surrounding the demand for payment; and
(7) any other relevant factors.
Application of the law to the present case
[60] The two defences raised by Balalaey present a genuine issue requiring trial.
[61] First, there is a genuine issue requiring trial as to whether receipt of the RTP by RBC constituted an event of default under the SBFL and VISA Agreements. If not, the 189 Loan Agreements could not have been called, nor could payment have been sought from Balalaey under the Guarantees.
[62] Second, even if receipt of the RTP by RBC constituted an event of default under the SBFL and VISA Agreements, there is a genuine issue requiring trial as to whether RBC failed to provide 189 or Balalaey with (i) reasonable notice of its intention to enforce its security, and (ii) reasonable time to pay following its notice of intention to do so, as required under Got.
[63] I address each issue below.
(i) Issue 1: The receipt of the RTP by RBC
[64] Balalaey led uncontested evidence that (i) the RTP was issued by CRA in error, “due to a mix-up with CRA as to which account [189’s] tax payments would be deducted from” and (ii) Balalaey “notified the CRA of this error, and the payment issue was fixed”.
[65] RBC acknowledged at the hearing that the RTP was the “instigating” event for default, as the RTP would typically reflect an inability of a debtor to pay its obligations (to CRA) as they became due. However, if Balalaey’s evidence is accepted at trial, then the court could find that in the circumstances of this case, there was no failure of 189 to pay its obligations as they became due, and, as such, the receipt of the RTP was not an event of default.
[66] In particular, there is a genuine issue requiring trial based on the evidence that: (i) CRA sent the RTP in error; (ii) 189 resolved that error and paid CRA; (iii) at no time was 189 in arrears of its payments to RBC under the SBFL and VISA Agreements; and (iv) RBC has refused to accept payments from 189 even though 189 has been willing and able to resume making payments to RBC until the entire amount of the debt is paid off.
[67] Consequently, there is a genuine issue requiring trial that the receipt of the RTP was not an event of default.
(ii) Issue 2: Reasonable notice
[68] If the receipt of the RTP is found to be an event of default, the court at trial will need to consider all of the evidence relating to the Got factors in order to determine whether RBC provided reasonable notice to 189 and Balalaey in seeking to demand payment and enforce both the SBFL and VISA Agreements and RBC’s security provided by Balalaey under the Guarantees.
[69] The evidence on this issue at the motion was only provided by Balalaey, and demonstrates a genuine issue requiring trial on the following Got factors:
(i) There appears to have been little risk to RBC of losing its money. The amount owed under the RTP was paid from funds in 189’s account and 189 was never in arrears of any payments of principal or interest to RBC;
(ii) RBC and 189 had been in a banking relationship since at least October 2014, with 189 never being in default;
(iii) RBC filed no evidence to impugn the character or reputation of 189, which continues to operate and has stated that it remains prepared to pay all amounts owing to RBC;
(iv) To date, RBC refuses to accept payment from 189;
(v) The evidence demonstrates that 189 was able “to raise the money required in a short period” to pay its excise tax obligations to RBC; and
(vi) The circumstances surrounding the demand for payment demonstrate that (a) RBC never raised the RTP as a concern before issuing the demand letters; (b) RBC never mentioned in the demand letters how the account fell into default; and (c) RBC refused to take any payments and continued with default proceedings even though 189 was never in arrears of its payment under the terms of the SBFL and VISA Agreements.
[70] Consequently, RBC has not met its onus to establish that there is no genuine issue requiring trial as to (i) 189’s liability to RBC under the SBFL and VISA Agreements or (ii) Balalaey’s liability to RBC under the Guarantees.
[71] Neither party requested a “mini-trial” and I would not order one in the circumstances of this case. The only issues in the action are the two defences raised by Balalaey. Consequently, a mini-trial could not effectively carve out an issue which would narrow down any remaining substantive issues for trial.
Partial summary judgment
[72] There are no grounds to consider partial summary judgment against 189, while having the action against Balalaey continue to trial. Under the Mason and Butera tests, the issues of the default of 189 and reasonable notice cannot be readily bifurcated. The risk of inconsistent judgments arises even if 189 did not attend at trial, since both the motion judge and the trial judge would be asked to consider the same issues and evidence, and make their own conclusions on the default and reasonable notice issues.
[73] Further, it is not appropriate to decide 189’s liability on summary judgment while leaving the issue of Balalaey’s liability under the Guarantees for trial, since there would be no “advancement achieved in terms of the action as a whole by rendering partial summary judgment in this case”: Mason, at para. 39.
Striking the defence under Rule 15.04(7)
[74] Also, I would not exercise my discretion to strike 189’s statement of defence. I rely on the following:
(i) Rule 15.04(7) only provides that a court “may” strike a defence if a corporation does not retain counsel. There must be a basis to support the exercise of that discretion;
(ii) In the present case, the defence raised by Balalaey, if accepted by the court, would result in dismissal of the action against 189, even if 189 did not have counsel at trial. Consequently, it would not be in the interests of justice to strike a defence and render judgment against a party who would be found not liable for its debt if the evidence of its sole shareholder, officer, and director is accepted at trial; and
(iii) In any event, Balalaey’s counsel advised the court at the hearing that Balalaey, as the sole shareholder, officer, and director of 189, had retained him to act on behalf of 189, which is consistent with the position advanced by Balalaey based on his defence that 189 was either not in default or that RBC failed to provide 189 with reasonable notice of its intention to pay and enforce its security.
[75] Consequently, I do not strike the defence of 189 under Rule 15.04(7).
Order and costs
[76] For the above reasons, I dismiss the motion for summary judgment against 189 and Balalaey.
[77] The parties asked to provide written costs submissions, in order to address issues relating to settlement offers and costs thrown away. If the parties cannot agree on costs, Balalaey shall provide written costs submissions of no more than three pages (not including a bill of costs) by October 23, 2020. RBC shall provide responding written costs submissions of no more than three pages (not including a bill of costs) by November 7, 2020. Balalaey may deliver reply written costs submissions of no more than one page by November 14, 2020. All costs submissions shall be delivered electronically to my assistant, Roxanne Johnson, at roxanne.johnson@ontario.ca.
GLUSTEIN J.
Date: 20201009
COURT FILE NO.: CV-18-597047
DATE: 20201009
ONTARIO
SUPERIOR COURT OF JUSTICE
ROYAL BANK OF CANADA
Plaintiff
AND:
1898936 ONTARIO INC. AND HOMAYOUN BALALAEY
Defendants
REASONS FOR DECISION
Glustein J.
Released: October 9, 2020
[^1]: The amount of principal and interest is $60,199.09 plus legal fees to enforce payment of $13,276.19. [^2]: Counsel for RBC advised the court that 189 had paid its VISA debt, but owed the outstanding balance on the SBFL Agreement. [^3]: (another company owned by Balalaey, as well as by Bezkool) [^4]: For ease of reference, I restate my analysis verbatim on the general principles applicable to the law of summary judgment (including the availability of partial summary judgment) as set out in my reasons in the companion motion in the Tandis Action.