COURT FILE NO.: CV-19-00623805
DATE: 20201208
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Royal Bank of Canada
Plaintiff
AND:
Irfan Rahman a.k.a. Syed Shah Irfanur Rahman and Faiz Rahman a.k.a. Faiz Ur Rahman
Defendants
BEFORE: Justice Vella
COUNSEL: Douglas O. Smith and Taha Hassan, for the Plaintiff
No one appearing for the Defendants
HEARD: December 1, 2020
REASONS FOR JUDGMENT/DECISION
[1] The Plaintiff’s motions seeking an order amending the style of cause, summary judgment against Faiz Rahman (“Faiz”) and default judgment against Irfan Rahman (“Irfan”) was heard on December 1, 2020
[2] At that time, I granted the relief sought by the Plaintiff, Royal Bank of Canada (“RBC”), with reasons to follow. These are the reasons.
Procedural History
[3] On July 24, 2019, Irfan was served with a copy of the Statement of Claim by leaving a copy with an adult member of his household, and then mailing a copy to him.
[4] On August 23, 2019, Irfan was noted in default.
[5] On the same day as Irfan, Faiz was also served with a copy of the Statement of Claim. He too was noted in default on August 23, 2019. However, he retained counsel and the noting in default was set aside on consent. He subsequently filed a Statement of Defence.
[6] Irfan was served with a copy of the motion record and supplementary motion record for the present motion, notwithstanding the fact he has been noted in default. This is a best practice and is encouraged; see Elekta Ltd. v. Rodkin, 2012 ONSC 2062 (“Elekta”).
[7] Faiz was also served with a copy of the motion record and supplementary motion record through his counsel. Counsel for RBC advised the court that last evening Faiz’s lawyer advised that he was not opposing the relief sought by RBC against his client.
[8] Neither defendant filed any responding motion material, nor appeared at court.
Motion to Amend the Style of Cause
[9] RBC seeks an order amending the style of cause so as to reflect the aliases used by Irfan and Faiz.
[10] A party may amend a pleading after the close of pleadings, and in the absence of consent, with leave of the court: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rr. 26.01 and 26.02(c).
[11] I am satisfied on the evidence that Irfan Rahman is also known as “Syed Shah Irfanur Rahman” and Faiz Rahman is also known as “Faiz Ur Rahman”. Irfan and Faiz’s respective aliases appear in the Master Client Agreement for Business Clients relating to the underlying corporate loan agreements to National Recycling Inc. (“NRI”) and Scraport Inc. (“Scraport”) and the guarantees entered into by Irfan and Faiz to secure a portion of the corporations’ respective indebtedness with RBC.
[12] I am also satisfied that the requested amendment is in the interests of justice, so as to allow RBC to enforce any resulting judgment effectively against the defendants.
[13] Furthermore, I am satisfied that the defendants will suffer no prejudice if the requested order is granted.
Motion for Summary Judgment Against Faiz Rahman aka Faiz Ur Rahman
[14] RBC seeks summary judgment against Faiz arising from his guarantees securing payment of indebtedness incurred by NRI and Scraport in favour of RBC.
[15] Pursuant to Rule 20, a plaintiff is entitled to move for summary judgment granting relief against the defendant. If the Court is satisfied that there is no genuine issue requiring a trial with respect to all or part of the claim, Rule 20.04(2) mandates that the Court “shall” grant summary judgment.
[16] In Hryniak v. Mauldin, 2014 SCC 7 (“Hryniak”), at para. 45, the Supreme Court of Canada confirmed that summary judgment is a “significant alternative model of adjudication”. Rule 20 provides judges with fact-finding powers (i.e. the power to weight evidence, evaluate credibility, and draw inferences) if required in order resolve claims without the need to have a trial.
[17] The focus is not on what further evidence could be adduced at trial, but rather, on whether a trial is required. A trial will not be required when the summary judgment 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 more proportionate, more expeditious and less expensive means to achieve a just result”: Hryniak, at para. 49.
[18] As confirmed by the Supreme Court, determination of a motion for summary judgment involves a two-step approach: first, the judge should determine whether there is a genuine issue requiring a trial based only on the evidence before her, without using the fact-finding powers. If there is no genuine issue requiring a trial, summary judgment must be granted. Second, if there appears to be a genuine issue requiring a trial, the judge should then determine whether “the need for a trail can be avoided” by using the fact-finding powers to weigh evidence, evaluate credibility and draw inferences: Hryniak, at paras. 66-68.
[19] On a motion for summary judgment, the moving party must establish a prima facie case that there is no genuine issue requiring a trial. The onus then shifts to the responding party. It is not sufficient for the responding party to simply rely on allegations in their pleadings; they must set out, in affidavit material or other evidence, specific facts showing there is a genuine issue requiring a trial. The responding party must put their “best foot forward” and the court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at paras. 26-27; aff’d 2014 ONCA 878; BNS v. Compas, 2018 ONSC 3262, at para. 9.
[20] Furthermore, a motion for summary judgment is particularly apt for claims which are not novel and claim liquidated damages. The present case fits into this category as it is an enforcement of a guarantee for liquidated damages: Bank of Montreal v. Javed, 2016 ONCA 49, at para. 20.
[21] With these guiding principles in mind, I have determined that there is no genuine issue requiring a trial based on the uncontested evidence in the motion record. I therefore grant summary judgment against Faiz for the reasons below as there is sufficient evidence to fairly and justly adjudicate the dispute, and a summary judgment is a timely, affordable and proportionate procedure to dispose of this matter. It will also serve the interests of judicial economy, since if brought to trial on the same evidence, the matter would require a significant allocation of court resources to adjudicate the matter: Ginkgo Mortgage Investment Corporation v. CDM Real Estate Developments Inc., 2018 ONSC 1461, at para. 40.
[22] By loan agreement dated September 11, 2018, and accepted by NRI on September 14, 2018, RBC provided a credit facility to NRI in the sum of $3,075,895.28 (as well as other facilities) on the terms and conditions outlined in the NRI Loan Agreement.
[23] By loan agreement also dated September 11, 2018, and accepted September 14, 2018 by Scraport, RBC provided a credit facility to Scraport in the amount of $2,000,000.00 on the terms and conditions outlined in the Scraport Loan Agreement.
[24] The debts and liabilities of NRI were guaranteed jointly and severally by both Irfan and Faiz by way of a Guarantee and Postponement of Claim provided by Irfan and Faiz to RBC dated September 14, 2018 (the NRI Guarantee) in the principal amount of $1,423,500 plus interest and charges as provided in the NRI Guarantee.
[25] The debts and liabilities of Scraport were also guaranteed jointly and severally by both Irfan and Faiz by way of a Guarantee and Postponement of Claim provided by Irfan and Faiz to RBC dated September 14, 2018 (the Scraport Guarantee) in the principal amount of $1,300,000.00 plus interest and charges as provided in the Scraport Guarantee.
[26] The NRI Guarantee and the Scraport Guarantee will be collectively referred to as the “Guarantees”.
[27] As security for repayment of all amounts owing by NRI to RBC, NRI also provided a General Security Agreement dated September 14, 2018. Of particular note, this General Security Agreement provided that NRI would be liable for and pay all costs charges and expenses reasonably incurred by RBC or any receiver appointed by it in enforcing the General Security Agreement, amongst other things.
[28] Scraport executed a substantially similar General Security Agreement dated September 14, 2018 as NRI, and also agreed it would be liable for and pay all costs, charges and expenses reasonably incurred by RBC or any receiver appointed by it in enforcing the General Security Agreement, amongst other things.
[29] There were also mutual guarantees and between NRI and Scraport.
[30] Under the Guarantees signed by Faiz and Irfan, they unconditionally agreed payment to RBC of all of the present and future debts and liabilities of NRI and Scraport (including Receiver expenses and associated legal fees). Under the terms of the Guarantees, Faiz and Irfan also agreed, amongst other things, to:
(a) Pay all legal costs, on a solicitor and client basis, incurred by RBC resulting from any action instituted on the basis of the Guarantees;
(b) Any debts and obligations owing by NRI up to $1,423,500 in the case of NRI and $1,300,000.00 in the case of Scraport;
(c) Interest on the debts and liabilities of NRI and Scraport at the rate equal to RBC’s prime interest rate plus 5% per annum from the date of demand of payment, and after and before default and judgment
[31] By June 24, 2019, NRI and Scraport fell into default under the terms of their respective loan agreements with RBC.
[32] On June 25, 2019, RBC issued a formal demand for payment and Notice of Intention to Enforce Security pursuant to s. 244 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, to NRI and to Scraport.
[33] On June 25, 2019, demands for payment were also issued to each of Irfan and Faiz under their Guarantees. However, no amounts have been repaid by either Irfan or Faiz.
[34] On July 12, 2019, RBC obtained an Order of the Superior Court of Justice appointing Deloitte Restructuring Inc. as the receiver and receiver manager over all of the assets, property and undertakings of NRI and Scraport.
[35] As of July 12, 2019, as confirmed by the Receiver, Deloitte, the total indebtedness of NRI of RBC was $2,643,054, while the total indebtedness of Scraport was $2,037,620 plus accruing interest. This is well in excess of the total amounts secured by RBC against the Guarantees of Irfan and Faiz.
[36] In addition, professional fees associated with the Receivership (which are added to the indebtedness and liabilities of NRI and Scraport under the terms of their respective General Security Agreements) were $156,897.50 together with disbursements in the amount of $44,615.60 for a total of $201,513.10.
[37] Furthermore, the fees of the Receiver’s counsel are $159,206.50 plus disbursements of $1,165.49 for a total of $160,371.99. This amount is also added to the indebtedness and liabilities of NRI and Scraport under the terms of their respective General Security Agreements.
[38] Under the NRI and Scarport Guarantees, interest continues to run on the principal amount of the Guarantees at the rate of the prime lending rate (3.95%) plus 5% for a total rate of 8.95% per annum.
[39] The above total outstanding indebtedness, Receiver fees and disbursements, legal fees and disbursements of Receiver’s counsel, and the rate of interest were all approved by Justice McEwan at the discharge of the Receiver on August 27, 2020.
[40] The total amounts owing by NRI and Scraport to RBC inclusive of principal, interest and costs, excluding legal costs associated with this Action, and as above outlined as of December 1, 2020 is $3,074,103.99. Faiz and Irfan’s Guarantees to RBC cover all of this indebtedness.
[41] Accordingly, I find that summary judgment is warranted against Faiz in the full amount of $3,074,103.99.
Motion for Default Judgment Against Irfan Rahman aka Syed Shah Irfanur Rahman
[42] RBC seeks default judgment in the amount of $3,074,103 against Irfan (on a joint and several basis with Faiz) plus costs.
[43] Irfan was noted in default on August 23, 2019. Therefore, he is deemed to admit the truth of the allegations of fact made in the Statement of Claim against him (Rule 19.02(1)(a)).
[44] As stated by this Court in Elekta at para. 14,
On a motion for default judgment, the inquiry undertaken by the court is the following:
(i) What deemed admissions of fact flow from the facts pleaded in the Statement of Claim?
(ii) Do those deemed admissions of fact entitle the plaintiff, as a matter of law, to judgment on the claim?
(iii) If they do not, has the plaintiff adduced admissible evidence which, when combined with the deemed admissions, entitles it to judgment on the pleaded claim?
[45] The affidavit evidence filed by RBC, as outlined in the previous section addressing summary judgment, supports the allegations of fact made in the Statement of Claim, and entitles RBC to default judgment against Irfan, in the sum of $3,074,103.99.
Order and Costs
[46] I grant an Order amending the style of cause so that the names of the defendants will be as follows: “Irfan Rahman a.k.a. Syed Shah Irfanur Rahman and Faiz Rahman a.k.a. Faiz Ur Rahman”.
[47] I grant judgment as against the defendants in the sum of $3,074,103.99 on a joint and several liability basis.
[48] Having considered the terms of the Guarantees and Justice McEwan’s Order, I am exercising my discretion under s. 130(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C. 43, to award post judgment interest at the rate 8.95% per year.
[49] On the matter of costs, I am satisfied based on the terms of the Guarantees, the Cost Outline filed and the factors in Rule 57.01, that costs of this Action should be made payable against the defendants on a full indemnity basis in favour of RBC, fixed and payable forthwith in the sum of $34,119.15, inclusive of fees, disbursement and HST, in exercise of my discretion under s. 131 of the Courts of Justice Act.
[50] I direct RBC to serve a copy of the Order, Judgment, and these Reasons on each of the Defendants.
Justice S. Vella
Date: December 8, 2020
COURT FILE NO.: CV-19-00623805
DATE: 20201208
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROYAL BANK OF CANADA
- and -
IRFAN RAHMAN a.k.a. SYED SHAH IRFANUR RAHMAN AND FAIZ RAHMAN a.k.a. FAIZ UR RAHMAN
REASONS FOR JUDGMENT/DECISION
Justice S. Vella
Released: December 8, 2020