Ghasempoor v. ICapital Financial Services Corp., 2020 ONSC 8010

Court File and Parties

Court File No.: CV-19-00617530-0000 Date: 20201221 Ontario Superior Court of Justice

Between: ALIREZA GHASEMPOOR Plaintiff/Defendant By Counterclaim – and – ICAPITAL FINANCIAL SERVICES CORP. Defendant/Plaintiff By Counterclaim -and- ATCITI CORP. Third Party

Counsel: Self-Represented Responding Party/Plaintiff/Defendant by Counterclaim (Alireza Ghasempoor) Peter Smiley, for the Moving Party, Defendant/Plaintiff by Counterclaim (ICapital Financial Services Corp.) Self-Represented Responding Party, Third Party (Atciti Corp.)

Heard: August 21, 2020

Endorsement – Reasons for Decision

VELLA J.

1This is a motion for summary judgment brought by ICapital Financial Services Corp. (“ICapital”) seeking dismissal of the main action brought by Alireza Ghasempoor (“Mr. Ghasempoor”) against ICapital and for judgment in favour of ICapital on its counterclaim against Mr. Ghasempoor and third party claim against Atciti Corp. (“Atciti”). For the following reasons, I am dismissing the main action brought by Mr. Ghasempoor in its entirety, and granting judgment in favour of ICapital on its counterclaim and third party claim.

Preliminary issue

2Mr. Ghasempoor is a self-represented party. Atciti is also represented by Mr. Ghasempoor, as a non-lawyer, by Order of Justice Koehnen dated August 22, 2019.

3Mr. Ghasempoor did not appear at the hearing, which was conducted virtually. Mr. Ghasempoor was provided with the videoconference link by the court office and was notified of today’s hearing.

4Myers J. ordered that this motion would be heard today by Zoom videoconference in His Honour’s Endorsement dated July 28, 2020 (“Myers Endorsement”). His Honour further ordered that a copy of this endorsement, which contained other terms germane to the required cross examination of Mr. Ghasempoor on his affidavit, be provided to Mr. Ghasempoor by way of email and registered mail by counsel for ICapital, Mr. Smiley.

5I am satisfied based on the evidence filed that Mr. Smiley properly delivered the Myers Endorsement to Mr. Ghasempoor sending it to the email address provided in the subject loan and guarantee documentation provided by Mr. Ghasempoor, and by Registered Mail to the address reflected on the Statement of Claim and the Motion Record filed by Mr. Ghasempoor.

6I waited 15 minutes to allow Mr. Ghasempoor an opportunity to join the hearing or otherwise communicate with the court or Mr. Smiley. When I re-convened court, Mr. Smiley offered to telephone Mr. Ghasempoor which he did in “open court” and on the record. Mr. Smiley had to leave a voicemail message, and reminded Mr. Ghasempoor of today’s hearing and to advise Mr. Smiley if he was having difficulty accessing the Zoom videoconference link.

7Mr. Ghasempoor did not appear at the motion, nor did he contact the court. Accordingly, after waiting a further 8 minutes, I commenced hearing the motion.

Motion to strike Mr. Ghasempoor’s Affidavit

8Mr. Ghasempoor filed a brief affidavit in response to this motion, sworn November 18, 2019, with exhibits.

9Myers J. ordered Mr. Ghasempoor to provide dates with a fixed timeframe to be cross-examined by Mr. Smiley. Myers J. put Mr. Ghasempoor on notice that if he did not provide a date and time for cross examinations or did not attend and answer proper questions by August 7, 2020, the court would likely strike out his affidavit at the hearing of this motion. However, Mr. Ghasempoor failed to provide Mr. Smiley with a date for his cross examination to take place, contrary to the Myers Endorsement. Mr. Smiley, in his materials, initially requested an order striking Mr. Ghasempoor based on breach of this court order, but at the hearing submitted that I should, instead, attach little or no weight to the affidavit.

10In the circumstances, I have reviewed and considered Mr. Ghasempoor’s affidavit, recognizing that ICapital was deprived of the opportunity to cross-examine Mr. Ghasempoor. Where Mr. Ghasempoor’s evidence is contradicted by ICapital’s evidence, I prefer ICapital’s evidence.

Test for Summary Judgment

11Pursuant to Rule 20.01 a defendant/plaintiff by counterclaim is entitled to move for summary judgment seeking dismissal of the main action and granting judgment on its counterclaim and third party claim after pleadings have been exchanged and supporting affidavit materials delivered. If the court is satisfied that there is no genuine issue requiring a trial with respect to all or part of the claim or defence, Rule 20.04(2) mandates that the court “shall” grant summary judgment.

12In 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.

13The 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)

14As confirmed by the Supreme Court of Canada, determination of a motion for summary judgment involves a two-step approach. The judge should first 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 trial can be avoided” by using the fact-finding powers to weigh evidence, evaluate credibility, and draw inferences: Hryniak at paras. 66-68.

15On 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 (ONSC) at paras. 26-27; aff’d 2014 ONCA 878 (Ont. C.A.).

16Furthermore, 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 loan agreement and a guarantee for liquidated damages.

17Mr. Ghasempoor states in his affidavit that this matter is not fit for summary judgment because ICapital rejected his request for examination for discovery and mediation. However, neither examinations for discovery nor mediation must be conducted in order for a motion for summary judgment to be heard.

18I have determined that there is no genuine issue requiring a trial based on the evidentiary record.

19I therefore grant summary judgment dismissing the action by Mr. Ghasempoor and granting the requested relief in the counterclaim and third party claim, 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.

Background and Chronology of Important Events

20This matter concerns a loan agreement that was renewed and a personal guarantee entered into by Atciti and Mr. Ghasempoor, as borrower and guarantor respectively, with ICapital as lender.

21ICapital is a corporation which is in the business of small business financing. Atciti is in the web development industry. Mr. Ghasempoor is a principal and president of Atciti.

22On November 21, 2018, Atciti entered into a term loan agreement (“TLA”). Under the TLA, ICapital advanced the sum of $40,000 to Atciti. Atciti agreed to repay the sum along with a fee of $12,000 (with no interest) through daily payments in the sum of $216.27 for a total sum payable of $52,000.

23Pursuant to the TLA, Atciti agreed that in the event of a default all indebtedness and liability would immediately become due and payable at the option of ICapital.

24On November 21, 2018, Mr. Ghasempoor executed a personal guarantee (the “Guarantee”), that provided that in the event of a default by Atciti, and on written demand by ICapital, Mr. Ghasempoor would forthwith pay ICapital the amount in default for which the demand was made. This included principal, interest, fees, charges and other amounts.

25On February 27, 2019, Atciti requested a renewal of the term loan agreement. Atciti and ICapital entered into a new term loan agreement which was incorporated by reference into the TLA as Schedule “A” (the “Renewal”).

26Under the Renewal, ICapital loaned the sum of $70,000 to Atciti in exchange for a fee of $21,000 (again with no interest), for a total balance outstanding of $91,000. This loan subsumed the amounts that were then outstanding under the pre-existing TLA. The Renewal required weekly payments by Atciti in the amount of $1750 until such time as the balance was paid.

27Furthermore, it was agreed that the Renewal in no way altered the remaining terms, conditions or remedies of the TLA, and that the Guarantee remain in effect and formed part of the Renewal.

28Prior to entering into the Renewal, ICapital obtain a second consumer report on Mr. Ghasempoor from Equifax, further to the initial consumer report obtained in relation to the TLA.

29On April 4, 2019, Mr. Ghasempoor commenced this action against ICapital alleging that ICapital had damaged his personal credit by reason of having ordered a second consumer report, and had made an “unreasonable payment demand”. On April 5, 2019, Atciti defaulted on the payments required under the Renewal.

30As a result of Atciti’s default, the outstanding sum under the Renewal of $82,250 accelerated and became due and payable immediately.

Main Action - Analysis

31I am providing a generous reading of the pleadings and affidavit evidence filed on behalf of Mr. Ghasempoor and Atciti. It is incumbent on the court to ensure fairness of the process with respect to all litigants. This duty takes on particular importance when any of the litigants before the court are self-represented.

32The Statement of Claim seeks monetary damages arising from Mr. Ghasempoor’s allegation that ICapital damaged his credit rating and made an “unreasonable payment demand”.

33The essence of Mr. Ghasempoor’s position is three-fold.

34First, by making a “premature” demand for payment of the accelerated outstanding indebtedness under the Renewal, ICapital is deprived of seeking payment of the accelerated outstanding indebtedness under the Renewal and Guarantee.

35Second, Mr. Ghasempoor and Atciti claim that outstanding indebtedness is $51,000, not the $82,250 claimed by ICapital.

36Third, ICapital obtained a second consumer report from Equinox concerning Mr. Ghasempoor without his further permission, and this request has caused damage to his financial credit standing.

37Mr. Ghasempoor does not quantify the damages he is seeking, nor has he filed any evidence in support of his allegation that the request by ICapital for a second consumer report was improper, or the damages he alleges to have suffered as a result of that request.

38Rather, Mr. Ghasempoor relies on underlying initial TLA dated November 21, 2018, the Renewal dated February 27, 2019, a Credit Inquiries document dated April 4, 2019, a letter from ICapital to Ghasempoor dated April 1, 2019, a letter from Mr. Ghasempoor to ICapital dated July 23, 2019 and a court order issued August 22, 2019 granting leave to Mr. Ghasempoor to represent Atciti Corp. as a non-lawyer in his responding record to the motion for summary judgment.

39However, Mr. Ghasempoor does not offer any evidence, independent of the exhibits, justifying his bald allegation made in his affidavit that ICapital made a “premature” demand for an accelerated payment of the outstanding indebtedness, or how that demand, if made, would disentitle ICapital from recovering any such outstanding indebtedness that may ultimately be found.

40Further, Mr. Ghasempoor does not offer any evidence, independent of the exhibits, justifying his bald allegation in his affidavit that outstanding indebtedness is only $51,000.

41In the business loan application made on behalf of Atciti by Mr. Ghasempoor (as principal and president), dated November 9, 2018, Mr. Ghasempoor expressly granted ICapital “irrevocable permission to release our confidential information to ICapital Financial Services (“ICapital”). I/We understand this information is being used for credit underwriting purposes only. Permission is also granted to contact any business past, present or future that we need to deal with including banks, landlords we currently use or will use in the future. Each person signing below consents to ICapital obtaining credit, financial and related personal or business information (including a credit information report) about the undersigned from any credit bureau or credit reporting agency in connection with this application. Each person also consents to the collection, use and disclosure of personal information as further detailed in the privacy policy published on the [website address].”.

42In addition, the application for the TLA contained an Information Disclosure Letter, which provides, in part, as follows:

“Each person signing below consents to [iCapital] obtaining credit, financial and related personal or business information (including a credit information report) about the undersigned from any credit bureau or credit reporting agency in connection with this application”

Mr. Ghasempoor signed the Information Disclosure Letter.

43Mr. Ghasempoor does not take issue with the fact that an initial credit report was ordered by ICapital with respect to his credit rating. He objects to the request for a further credit report which was ordered when the Renewal was entered into.

44ICapital says that it was understood that a further credit report would be obtained upon renewal and points to the fact that the Renewal expressly incorporated the initial TLA by way Schedule “A” to the Renewal. The Renewal also bears the signature of Mr. Ghasempoor.

45In addition, in Ontario, consumer reporting is regulated by the Consumer Reporting Act, R.S.O. 1990, c. C33 (the “Act”). Section 8(1) of the Act only allows consumer reporting agencies such as Equinox, the authority to provide consumer reports in certain circumstances including where the requestor intends to use the information “in connection with the extension of credit”.

46Section 10 of the Act requires that the requestor (ICapital) provide notice of its intention to obtain a credit report at the time of the application for credit. The Information Disclosure Letter provided to Atciti and Mr. Ghasempoor at the time of the Application for the TLA provided that notice. ICapital was entitled to rely on that Information Disclosure Letter at the time of the Renewal as no subsequent application was made at the time of renewal, and the Renewal was expressly incorporated into the TLA.

47I find that Mr. Ghasempoor consented to ICapital obtaining a second credit report from Equinox as a condition of the Renewal. Furthermore, and in any event, Mr. Ghasempoor has failed to provide any evidence as to what damages, if any, he suffered as a result of this second request.

48I will address Mr. Ghasempoor’s position that the outstanding indebtedness is $51,000 and not $82,250 as claimed by ICapital in the next section of my reasons. I will also address his argument that the letter dated April 1, 2019 from ICapital was a premature demand for accelerated payment of all of the outstanding under the Renewal in the next section of my reasons.

Counterclaim - Analysis

49The essence of ICapital’s claim is that Atciti defaulted in its weekly payments required under the Renewal on April 5, 2019. This default triggered an acceleration of the balance of repayment of payments then owed under the Renewal pursuant to its express terms.

50Furthermore, pursuant to the Renewal and personal Guarantee signed by Mr. Ghasempoor dated February 27, 2019, Atciti’s default triggered Mr. Ghasempoor’s personal obligation to pay forthwith, and on written demand by ICapital, all indebtedness including any accelerated obligations. The liability of Guarantor is stated to be unlimited.

51The signed Renewal, Guarantee and TLA, filed in evidence, substantiates ICapital’s claims.

52ICapital relies on its counterclaim as its demand under the Guarantee and points to the fact that Mr. Ghasempoor does not dispute that a demand has been made.

53Schedule “A” to the TLA, expressly states that the Renewal is part of the initial TLA with the exception that the indebtedness that the capital amount of the loan is increased $70,000 and a fee of $21,000, for a total amount of indebtedness of $91,000.00. It also states that the Guarantee continues to be in full force and effect. Schedule “A” is signed by Mr. Ghasempoor on behalf of Atciti.

54The Guarantee establishes Mr. Ghasempoor’s obligation to be personally responsible to pay the outstanding indebtedness under the TLA and Renewal upon written demand.

55The evidence establishes that Atciti through Mr. Ghasempoor made the required weekly payments of $1750 for five weeks before defaulting on April 5, 2019. Accordingly, the total outstanding indebtedness owed by Atciti, and guaranteed by Mr. Ghasempoor, is $82,250; namely $91,000 less payments of $8,750.

56Mr. Ghasempoor alleges that ICapital made a premature demand for payment of the accelerated amount due under the Renewal through a letter from ICapital to Atciti dated April 1, 2019 and that this alleged breach of the Renewal disentitles ICapital from collecting the outstanding indebtedness.

57I do not accept that the letter dated April 1, 2019 amounts to a demand for payment under the Renewal or Guarantee. The letter states the amount outstanding as at April 1, 2019 under the loan, but does not make any demand for payment. It is a statement of account showing the outstanding indebtedness as of April 1, 2019.

58In any event, it is undisputed that Atciti ceased making the payments required under the Renewal the day after Mr. Ghasempoor commenced this litigation against ICapital.

59Therefore, ICapital is entitled to judgment on its counterclaim and third party claim in the sum of $82,250.00 against Mr. Ghasempoor and Atciti, on a joint and several liability basis.

Judgment and Costs

60Judgment is awarded in favour of ICapital, as against Atciti Corp. and Mr. Ghasempoor on a joint and several basis, as follows:

(a) Judgment on the counterclaim and third party claim in the sum of $82,250.00 as liquidated damages; (b) Dismissal of the main action; (c) Pre-judgment interest from April 5, 2019 under the Courts of Justice Act; and (d) Post-judgment interest from the date of judgment under the Courts of Justice Act.

61At the motion I asked Mr. Smiley to provide his cost outline by uploading it to sync.com and to provide a copy to Mr. Ghasempoor.

62Mr. Ghasempoor has not filed any response to the cost outline.

63I have reviewed the costs outline and fixed the costs, on a partial indemnity basis, in the sum of $6,678.50 plus HST, and $1,315.17 for disbursements, payable by Atciti and Mr. Ghasempoor to ICapital on a joint and several basis.

64In so doing I have considered the factors in Rule 57.01, including the reasonableness of the partial indemnity rates of the lawyers and law clerk, as well as the time attributed to this proceeding.