COURT FILE NO.: CV-17-63377, 17-63374, CV 17-63375 SR, CV-17-63376
DATE: 2020/02/04
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
2257573 Ontario Inc.
Manjit S. Virk, for the Plaintiff/Defendant by Counterclaim/Moving Party
Plaintiff/Defendant by Counterclaim/ Moving Party
- and -
Alex Aiden Fitzgerald Furney also known as Alex Furney, Maryam Furney and Hassan Hashemi
Trent Morris for the Defendants/Plaintiffs by Counterclaim.
Defendants/Plaintiffs by Counterclaim
HEARD: November 5, 2019, January 31, and February 3, 2020
REASONS FOR RULING ON A SUMMARY JUDGMENT MOTION
Turnbull, J.
overview of the case:
[1] The plaintiff has brought a motion in these four actions for summary judgment on a series of mortgages which it alleges are in default. The defendants have counterclaimed in each action alleging that they were induced to sign the mortgages on the misrepresentations of the plaintiffs. The mortgages were high interest, short term (one to three months) loans to enable the defendants to refinance their properties in the interim. The defendants allege that the plaintiff failed to fund the removal of several executions registered against the defendants, Alex Furney and Maryam Furney, so that their planned refinancing of the properties against which the plaintiff’s mortgages were placed, could be effected. To this date, almost three years after the plaintiff registered its mortgages, nothing has been paid by the defendants.
Summary of the Facts:
[2] The plaintiff (mortgagee) carries on the business of secured lending against real estate properties. The directing mind of the plaintiff is Anil Kingrani, whose affidavits have been filed in all four actions.
[3] The defendant Maryam Furney is a mortgage agent and is an experienced investor in real estate. She is the registered owner of two properties against which mortgage loans were advanced and/or secured by the plaintiff. Those properties are known municipally as 253 Four Mile Creek Road, Niagara-on-the-Lake, Ontario (hereinafter 253 Four Mile Creek) and 419 Progressive Avenue East, Niagara-on-the-Lake (hereinafter 419 Progressive). She is married to her co-defendant Alex Aiden Fitzgerald Furney. He was the registered owner of one property at 1384 York Road, Niagara on the Lake and against which a collateral mortgage was registered by the plaintiff as security for a loan to his co-defendants. Mr. and Mrs. Furney both signed as personal guarantors of the mortgages registered by the plaintiff against the property owned by their co-defendant Hassan Hashemi.
[4] The defendant Hassan Hashemi was at all material times the registered owner of the lands and premises at 428 Dundas Street, Woodstock Ontario, against which the plaintiff has registered two mortgages.
[5] A review of the circumstances which led to the registration of the mortgages is in order.
Position of the Defendants:
[6] The defendant Maryam Furney was in financial difficulty in early 2017. She had a number of executions registered against her and she had to refinance her properties in order to extricate herself from her financial predicament. She was put in a position that in February 2017, she had little time to refinance her property at 253 Four Mile Creek.
[7] The defendant Hassan Hashemi was a friend of the defendants Maryam and Alex Furney. He was a tenant in the 253 Four Mile Creek property and had done renovation work on that property and other properties for Maryam Furney. He has sworn that in late 2016, he was considering purchasing 419 Progressive Avenue East from Ms. Furney but was unable to do so as a mortgage statement was unavailable from one of the mortgagees.
[8] In due course, he decided to try to purchase 253 Four Mile Creek with a co-investor and then divide the property into four building lots. He learned in early 2017 that one of the mortgagees on 253 Four Mile Creek had obtained default judgment and was planning to sell the property by power of sale proceedings. Mr. Hashemi did not want to see that happen and he learned that Ms. Furney was in discussions with the plaintiff about possibly refinancing her property with that firm.
[9] Mr. Hashemi swore that in mid-February 2017, he attended at a home being constructed by Mr. Kingrani or the plaintiff corporation. While there, he discussed the possible refinancing with Ms. Furney. Mr. Kingrani allegedly stated that if there was to be a refinancing, Mr. Hashemi would have to allow one or more of his properties to act as collateral security. Mr. Hashemi stated that he would not do that. He has sworn that, ultimately, he allegedly agreed to do so if the plaintiff agreed to provide sufficient financing to permit the Furneys to pay off any existing judgments that affected the properties to be refinanced by the Furneys. He explained he insisted on this condition because he had previously tried to purchase a property from Maryam Furney but was unable to do so because of an outstanding judgment. He did not want to be in a position where he provided collateral security on one of his properties and then have his potential purchase of 253 Four Mile Creek Road blocked due to the existence of an outstanding judgment. Mr. Hashemi swore in his affidavit that he told Mr. Kingrani that he was not “going to allow you to secure anything with my properties unless you pay all the judgments as we agreed”. He alleges that Mr. Kingrani agreed.
[10] Not surprisingly, Mr. Kingrani denies any such agreement was reached.
[11] Ms. Furney then contacted Mr. Kingrani. This led to three mortgage transactions taking place and which are the subject of this litigation.
The First Mortgage Transaction: Action CV 17-633375: Third mortgage on 253 Four Mile Creek Road and collateral mortgage against 428 Dundas Street, Woodstock Ontario.
[12] Ms. Furney first asked Mr, Kingrani to have the plaintiff advance funds to pay out the third mortgage on 253 Four Mile Creek. A “mortgage commitment” (poorly worded like the other mortgage commitments in these transactions) was signed on February 17, 2017 by all three of the defendants[^1]. The mortgage commitment was drafted by a mortgage broker involved in putting the transaction together. It provided for onerous terms, some of which are listed below:
Assumption of the existing $67,000 3rd mortgage at 12%. (This referred to the third mortgage registered against the Furney property at 253 Four Mile Creek Road. Mr. Hashemi did use the funds advanced to him by the plaintiff to take an assignment of that mortgage[^2]).
The third mortgage was to be amended to reflect a principal amount of $82,000 due to lender’s fees and mortgage broker fees being added to the principal amount.
The third mortgage was to be amended to show an interest rate of 18%.
The maturity date of the mortgage was to be May 18, 2017.
NSF or late charge $350.
$6,800 penalty will be due if mortgage not paid out on time.
Lender fee of $8,200 to be deducted from mortgage advance.
Brokerage Fee $3,000 to Muthukumarasamy Thulasitharan to be paid on closing.
Brokerage fee of $3,000 to Trillium Mortgage to be paid on closing.
Default penalty $6,800.
Discharge Fee $500.
[13] Mr. Hashemi swore that the sum of $61,310.00 was advanced by the plaintiff pursuant to the mortgage commitment on or about February 22. 2017. He stated that relying on the representations of Mr. Kingrani, he agreed to a second mortgage in the amount of $82,000 to be registered against his property at 428 Dundas Street, Woodstock Ontario.[^3] Mr. and Mrs. Furney signed personal guarantees of that indebtedness.[^4] He agreed that he signed instructions to his solicitor which provided for onerous terms including an interest rate of 18% per annum, lender’s fees of $8,200 and mortgage brokerage fees of $6,000 to be deducted from the mortgage advance, and that the principal on the registered mortgage was to be $82,000. As agreed, he used the funds advanced to take an assignment of the third mortgage on the Furney property at 253 Four Mile Creek Road.[^5]
[14] In all the transactions related to this litigation, the parties agree that each had independent legal advice when closing the transaction. Mr. David Martin represented all three defendants and Mr. Ranjeet Walia represented the plaintiff. Mr. Hashemi has complained that he did not have independent legal representation apart from Mr. and Mrs. Furney but I find that is of no import to the issues on this motion.
The Second Mortgage transaction: Action CV 63376: Mortgage for $620,000 against 1384 York Road (owned by Alex Furney) and 419 Progressive Avenue (owned by Maryam Furney).
[15] A mortgage commitment was drafted by the plaintiff with respect to only the above two properties and signed on February 28, 2017 by the defendants.[^6]
[16] It provided, in part, as follows:
A collateral mortgage in the amount of $610,000 which includes lender broker fees 12% ($536,148.80 plus $64,337.85 =$600,486.45 and additional $10,000).
30-day term.
24% interest rate when not in default.
The lender acknowledges the executions registered against the borrowers and guarantors.
In the event of default or if the mortgage is not paid in full by the due date, lender’s default administrative fee of $5,000 will be applicable.
[17] The defendants allege that as a result of negotiations with Mr. Kingrani, it was further agreed as follows:
A. The plaintiff would advance $537,000.00 (which was increased by $10,000.00 on closing) and pay out the first and second mortgages against 253 Four Mile Creek;
B. A first mortgage would be registered in favour of the plaintiff against 253 Four Mile Creek;
C. Hashemi would postpone the third mortgage in respect of which he had received an assignment;
D. A lender fee of 10% would be charged;
E. A broker fee of 2% would be charged;
F. The interest rate would be 24% per annum;
G. The plaintiff would pay out three judgments against the Furneys within 30 days and take an assignment of them. Those judgments were:
i. Abraham – approximately $200,000.00;
ii. Cruz – approximately $250,000.00; and
iii. Metivier – approximately $25,000.00;
H. In consideration for paying out the three judgments in addition to the third mortgage, the plaintiff would receive additional collateral security over 419 Progressive Avenue and also receive an assignment of the judgments.
I. The plaintiff would agree to lift the executions to permit the sale or refinancing the properties;
[18] The terms of this alleged agreement were never reduced to writing.
[19] In February 2017, the title to 253 Four Mile Creek was subject to the following encumbrances:
a. A first mortgage (the Elle mortgage) and a second mortgage (the Subprime mortgage).
b. A third mortgage with approximately $62,000 owing. (which ultimately was assigned to Mr. Hashemi from the proceeds he received from the first mortgage transaction).
c. A judgment of approximately $198,000 owing to Mr. Joseph Abraham;
d. A judgment of approximately $200,000 owing to Mr. Antonio Cruz; and
e. A judgment of approximately $25,000 owing to Mr. and Mrs. Metivier.
[20] Ms. Furney stated in her affidavit that she agreed to grant additional collateral security against 419 Progressive Avenue to protect the plaintiff for the amounts paid out on the judgments. She alleges that she then would have been in a position to sell properties to satisfy the indebtedness to the plaintiff if she was not able to refinance some or all of them. She further asserted that absent the agreement to pay out the judgments, there was no necessity for a blanket mortgage to go on both 419 Progressive Avenue and on 1384 York Road because the plaintiff was fully secured by having essentially taken the position of a first mortgagee on 253 Four Mile Creek. She swore that the only reason the plaintiff was given mortgages on the Progressive Avenue and York Road properties was because the plaintiff assured the defendants that the judgments would all be paid out so that she was able to fully refinance or sell the properties.
[21] Alex, Hashemi and Maryam all used the same lawyer, Mr. Martin, to close the mortgage transactions. Mr. Martin has not filed an affidavit to provide any information relating to the alleged change of terms in the original commitment and if there was a legal obligation on the plaintiff to pay out the three judgments as alleged by Ms. Furney.
[22] However, the mortgage commitment signed by the defendants did not mention any obligation of the plaintiff to pay off the three judgments as alleged by them. The mortgage commitment clearly was varied by agreement of the parties to incorporate 253 Four Mile Creek Road as part of the security given to the plaintiff.
[23] On February 28, 2017, the plaintiff advanced $546,000 which was to be secured by obtaining an assignment of the first and second mortgages registered against title to 253 Four Mile Creek Road.[^7] When that occurred, it effectively made the plaintiff the first mortgagee. On the same day, the plaintiff also registered mortgages for $610,486.65 against the titles to 419 Progressive Avenue and 1384 York Road. The charge registered against 1384 York Road did not indicate on its face that it was collateral to other mortgages.[^8] The charge for 419 Progressive Avenue was not produced in the motion records. However, it was agreed that they both were further amended and increased to $620,985.00 by notice dated March 10, 2017.[^9]
The Third Mortgage Transaction: Actions CV 63377 and CV 63374: Mortgage against 419 Progressive Avenue with collateral third mortgage for $105,000 against 428 Dundas Street, Woodstock.
[24] A third mortgage commitment was also signed with respect to this transaction on March 9, 2017.[^10] That document stated at its beginning as follows:
Private Lender is pleased to confirm that he has agreed purchase the WRIT REGISTERED UNDER NAME OF MARYAM FURNEY &ALEX FURNEY. As per following terms and conditions (only some are included for the purposes of this litigation):
TERMS:
Lender: 2257573 Ontario Inc.
Borrower(s): Maryam Furney & Hassan Hashemi
Property Address: 428 Dundas Street, Woodstock On
COLLATERAL TRANSFER OF CHARGE: 418 Progressive Avenue, Niagara on the Lake in the amount of $179,075.
Principal: $105,000
Interest Rate: 24% per annum.
Monthly Payment: $5680 (interest only will be paid 4th day of each and every
Term: 3 months (Closed)
[25] The mortgage commitment further provided that $200,000 of the $249,920 being advanced was to be paid out to Maryam Furney and the balance to her co-defendant Hassan Hashemi.
[26] The plaintiff did advance $249,920.00[^11] pursuant to the Mortgage Commitment signed by the defendant Hasan Hashemi and guaranteed by Maryam Furney and Alex Furney.[^12] Its lawyer Mr. Walia did sign and register a second mortgage on 428 Dundas Street property for $105,000[^13]. That document provides at the very bottom of the page stated as follows:
THE MORTGAGE FUNDS WILL BE USED TO PURCHASE THE WRITS REGISTERED AS 16-0000475[^14] & 15-0000670.[^15]
[27] Though the net proceeds of the mortgage advance were forwarded to the defendants’ lawyer Mr. Martin, the funds were not used to pay out both those writs.
[28] The plaintiff was also given an assignment of the Abraham mortgage registered against the Furney property owned on Progressive Ave. East. The Abraham mortgage was a second mortgage on Progressive Avenue. That mortgage had fallen into default and the mortgagee Joseph Abraham had obtained judgment. He was one of the three judgment creditors who allegedly had to be paid out by the plaintiff as part of the defendants’ plan to refinance or sell the properties. Joseph Abraham was paid out from the $249000 advanced and his mortgage was assigned to the plaintiff as part of that transaction.[^16] That document was also signed and registered by the plaintiff’s lawyer. It contains terms and conditions which were not part of the terms of the mortgage commitment. They are as follows:
The transferee agrees to retransfer this charge on payment of $179,075.00 and 10% LENDER FEES as Principal at 24% PER ANNUM as follows term of the mortgage will be 3 months. Maturity date will be June 10, 2017. Otherwise Default Penalty Fees will be $6800. N.S.F. FEES will be $350.00. Hassan Hashemi will be signing as guarantor and collateral mortgage will be registered on his property 428 Dundas Street, Woodstock. ON as mortgagor/charger and monthly payment will be $5450. Mortgagor and Guarantor fully agreed the new transferee terms and conditions.
This document relates to registration numbers(s) NR357617 & NR357643.
Position of the Defendants:
[29] Ms. Furney has sworn in her affidavit[^17] that Mr. Kingrani was insistent that the outstanding judgments which affected title to 253 Four Mile Creek Road had to be satisfied so that if that property was sold by her, she would be able to repay the amounts due to him. She asserts that Mr. Kingrani insisted that if he was to do this, he would require additional security which was given on 419 Progressive Avenue and 1384 York Road. She stated that Mr. Kingrani was to pay the judgments, take an assignment of the judgments and lift the judgments to permit sale or refinancing of the properties. She states that absent such an agreement, there was no necessity to cross-collateralize the properties as the pending sale price of 253 Four Mile Creek Road in February 2017 was $850,000 and only $547,000 was being advanced. She agrees that the additional security was necessary to pay out all three of the judgments to Cruz, Metivier (Law Pro) and Abraham.
[30] Mr. Hashemi swore in his affidavit that Mr. Kingrani agreed that each of the judgments would be paid out and that it would be done step by step. He asserts that he would not have allowed a mortgage to be placed against his property at 428 Dundas Street, Woodstock if that had not been the case.
[31] The defendants submit that there is a genuine issue to be tried and the matter of whether there was a representation, or an agreement made by Mr. Kingrani on behalf of the plaintiff corporation, is a matter of credibility upon which the court must hear evidence.
Position of the Plaintiff:
[32] The plaintiff denies these facts and asserts that there was nothing agreed with respect to payment of all outstanding Writs of Execution. In support of that, Mr. Virk noted that the existence of the outstanding judgments was acknowledged in the commitment relating to the second mortgage transaction[^18] but no provision was inserted requiring the plaintiff to pay out the defendants’ judgments. Furthermore, in the one instance (the third mortgage transaction referenced above), the specific writ numbers to be paid out were identified on the first page of the mortgage[^19]. Funds were advanced to the defendants’ solicitor Mr. Martin and only the Joseph Abraham judgment was paid, and the writ was thereafter withdrawn. The judgment in favour of Law Pro (assigned from the Metiviers) was not paid out as promised. The plaintiff asserts that at no time nor in any document did he agree to fund the payout of the judgment in favour of Antonio Cruz in the amount of $291,000.00.
The Law:
[33] Mr. Morris, counsel for the Defendants/Plaintiffs by Counterclaim submit that all issues but the issues of the inducement of the mortgages by the undertaking to pay executions, and their counterclaims founded on the breach of that undertaking, are amenable to summary judgment.
[34] In Trotter Estate, 2014 ONCA 841, the Court of Appeal described the powers under Rule 20.
[47] The 2010 amendments to the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, expanded the availability of summary judgment by altering the wording of the test and vesting motion judges with enhanced powers to assess conflicting evidence. The test under rule 20.04(2)(a) is no longer whether there is a “genuine issue for trial” but rather whether there is a “genuine issue requiring trial.” The additional powers granted to motion judges under rules 20.04(2.1) and (2.2) are as follows:
Powers
(2.1) In determining under clause 2(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, 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 a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
Oral Evidence (Mini-Trial)
(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.
[48] These changes were designed and implemented to improve access to justice by providing a mechanism to resolve issues more expeditiously than through a traditional trial. In appropriate cases, the motion for summary judgment provides an alternative model of adjudication that has the benefit of streamlining the process for litigants and making the civil justice system more accessible and affordable.[^20]
Analysis:
[35] I am satisfied that I should hear viva voce evidence from the parties who have filed affidavits in this matter as credibility is an important factor in the determination of this summary judgment motion. Counsel did not cross examine the parties or the other witnesses who have filed affidavits submitted on this motion. In order to determine if there is a genuine issue requiring a trial, I wish to hear the viva voce evidence of Mr. Kingrani, Ms. Furney, and Mr. Hashemi who are the parties who filed affidavits on this motion.
[36] I direct that they each shall be cross-examined orally before the court on their affidavits with respect to the issues of alleged inducement and misrepresentation related to whether the plaintiff had agreed to provide financing to pay out the Cruz and Metivier judgments as part of the agreement related to the refinancing of the defendants’ properties. After each cross-examination, counsel for the deponent of the affidavit, will have a right of re-examination. Their affidavits shall serve as their examination in chief.
[37] It is ordered that the parties shall attend before this court on Monday April 20, 2020 at 10:00am, Wednesday April 22, 2020 and Friday April 24, 2020 to give their viva voce evidence.
[38] If there is any logistical issue which arises with respect to this matter, counsel are to contact the Trial Co-ordinator of this court at the John Sopinka Courthouse in Hamilton so that she can contact me to seek instructions with respect to resolving any such issue.
Turnbull J.
Released: February 4, 2020
COURT FILE NO.: CV-17-63377, 17-63374, CV 17-63375 SR, CV-17-63376
DATE: 2020/02/04
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
2257573 Ontario Inc.
Plaintiff/Defendant by Counterclaim/
Moving Party
- and –
Alex Aiden Fitzgerald Furney also known as Alex Furney, Maryam Furney and Hassan Hashemi
Defendants/Plaintiffs by Counterclaim
REASONS FOR RULING ON A SUMMARY JUDGMENT MOTION
Released: February 4, 2020
[^1]: Action CV 17-633375: Affidavit of Mr. Kingrani, exhibit A, page 20 of the Motion Record.
[^2]: Exhibit 3, tab 1, Transfer of Charge dated Feb. 22, 2017 registered as Instrument NR439650.
[^3]: Exhibit 3, tab 6. Instrument No. CO160684 registered February 17, 2017.
[^4]: Exhibit C to the Affidavit of Anil Kingrani, Tab 2 in the Motion Record in Action CV 17-633375.
[^5]: Exhibit 3, tab 1, page 4 of 4. Instrument No. NR439650 registered February 22, 2017.
[^6]: Exhibit A to the affidavit of Anil Kingrani, Plaintiff’s Motion Record, page 20.
[^7]: Exhibit 3, tab 1.
[^8]: Re 384 York Road: see exhibit 3, tab 11. Re 491 Progressive Avenue: see exhibit 3
[^9]: Exhibit 3, tab 16.
[^10]: Motion Record at page 21, exhibit A to affidavit of Anil Kingrani.
[^11]: See page 31 of Motion Record. Mr. Walia forwarded $245,913.96 to the defendants’ lawyer David Martin after having deducted his legal fees of $4006.04 from the $249,920 advanced.
[^12]: Motion Record for Files CV 63377 and CV 63374, Exhibit A, pages 21, 22, and 23 to the affidavit of Anil Kingrani sworn July 11, 2019.
[^13]: Motion Record at page 24, exhibit B to the affidavit of Anil Kingrani.
[^14]: Counsel have agreed that this was the outstanding judgment held by Joseph Abraham.
[^15]: The outstanding judgment assigned to Law Pro by Sital Metivier and Colin Metivier in the amount of $29,366.43. See page 149-150 of the Motion Record.
[^16]: Exhibit 3, tab 17.
[^17]: Motion Record in Action CV 74 and 77, page 5, para. 23-25.
[^18]: Action CV17-63376. Motion Record, exhibit A to the affidavit of Anil Kingrani, at page 20.
[^19]: Action CV17-63374 and Action CV17-63377. Motion Record at page 24, exhibit B to the affidavit of Anil Kingrani.
[^20]: Trotter Estate, 2014 ONCA 841, at paras. 47-48.