COURT FILE NO.: CV-19-00001816-0000
DATE: 2021/07/07
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: The Toronto-Dominion Bank Plaintiff
- and -
Axis Freestyle Inc., Axis Freestyle Inc. o/a Axis Freestyle Academy, Simon Chang aka Simon Kok-Ping Chang aka Simon Kok Ping Chang, and Adam Zigomanis aka Adam C. Zigomanis, William Zigomanis aka Bill Zigomanis and Mary Zigomanis Defendants
BEFORE: Bloom, J.
COUNSEL: Shawna Sosnovich, for the Plaintiff, the Moving Party
Rahul Gandotra, for the Defendants Simon Chang and Adam Zigomanis, the Responding Parties
HEARD: July 6, 2021
E N D O R S E M E N T
I. INTRODUCTION
[1] The Plaintiff moves for summary judgment against the Defendants, Simon Chang and Adam Zigomanis, on personal guarantees of a loan and a Visa credit card balance owed the Defendant, Axis; in respect of the credit card balance the Plaintiff moves alternatively for summary judgment on a credit card agreement.
II. FACTUAL BACKGROUND
[2] The Responding Parties signed in January of 2016 guarantees of the loan by the Plaintiff to Axis and an agreement with the Bank in respect of the Visa credit card debt of Axis.
[3] Default judgment was granted against Axis on June 24, 2019 inter alia for $205,028.61 on the loan and $9,698.79 in respect of the credit card balance.
[4] The Moving Parties concede that according to the literal wording of the guarantees that they are responsible for 100% of those amounts.
III. ARGUMENTS OF THE PARTIES
[5] The Plaintiff argues first that the Responding Parties have raised no genuine issue requiring a trial with respect to its claims. They rely principally on the content of the documentation signed by the Responding Parties in respect of the guarantees and the credit card. Second, the Plaintiff rejects any argument about the appropriateness of partial summary judgment based on the existence of an attack on a mortgage given by Adam Zigomanis to William and Mary Zigomanis which is also subject of the Amended Statement of Claim, but not subject of the summary judgment motion. The Plaintiff contends that the mortgage issue is entirely different and distinct from the claims subject of the motion before me.
[6] The Responding Parties contend first that, despite the documents that they signed, they believed, based on the documents provided in relation to the guarantees and the representations of the Bank employees with whom they dealt, that their liability on the guarantees was limited to 25% each; they ask in their Statement of Defense that the material contractual obligations ought to be rectified accordingly. Second, they argue that they were not obligated personally for the credit card debt. Third, they argue that granting summary judgment in the case at bar would offend principles governing partial summary judgment by creating risks of duplication of fact-finding and of inconsistent facts being found; they assert that those risks exist as between the summary judgment motion and the trial of an attack on a mortgage as a fraudulent preference, which allegation is also subject of the Amended Statement of Claim.
IV. GOVERNING PRINCIPLES
[7] In Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, at paras. 23 to 27, Justice Roberts for the Court set out the principles governing motions for summary judgment:
(1) The Framework for Summary Judgment
[23] At the heart of this appeal is the motion judge’s approach to summary judgment and, specifically, her treatment of the evidence and record before her. Absent an error of law, a misdirection, or the creation of an injustice through a decision that is clearly wrong, a motion judge’s determination of these questions is generally entitled to considerable deference on appeal: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at paras. 81-84. However, here, appellate intervention is required, as the motion judge fell into error and misdirected herself because she failed to determine whether summary judgment was appropriate, having regard to the entire evidentiary record and the Hryniak analytical framework.
[24] This determination required the motion judge to follow the analytical approach set out in Hryniak, at para. 66, which is summarized as follows:
First, the motion judge should have determined if there was a genuine issue requiring a trial based only on the evidence before her, without using the enhanced fact-finding powers under r. 20.04(2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Second, if there appeared to be a genuine issue requiring a trial, the motion judge should have determined if the need for a trial could be avoided by using the enhanced powers under r. 20.04(2.1) – which allowed her to weigh evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence – and under r. 20.04(2.2) to order that oral evidence be presented by one or more parties.
[25] While summary judgment is an important tool for enhancing access to justice and achieving proportionate, timely, and cost-effective adjudication, there is no imperative on the court to use it in every case: Trotter Estate, 2014 ONCA 841, 122 O.R. (3d) 625, at para. 49; Lesenko v. Guerette, 2017 ONCA 522, 416 D.L.R. (4th) 349, at para. 30. As affirmed by the Supreme Court in Hryniak, at para. 28, the overarching goal remains to have “a fair process that results in a just adjudication of disputes.”
[26] Indeed, notwithstanding the parties’ agreement that the action and counterclaims could be determined by summary judgment, it is still incumbent on the motion judge to decide whether it is appropriate to grant summary judgment: Rules of Civil Procedure, r. 20.04(2)(b).
[27] In determining whether summary judgment is appropriate, motion judges are required to engage with the Hryniak analytical framework process, as described above, look at the evidentiary record, determine whether there is a genuine issue requiring a trial, and assess, in their discretion, whether resort should be taken to the enhanced powers under rr. 20.04(2.1) and (2.2) of the Rules of Civil Procedure. To do otherwise runs the risk that, in an effort to dispose of a case in a summary fashion, motion judges will not properly analyze the evidence: Trotter, at para. 49. Unfortunately, that is what occurred here.
[8] Justice Roberts also emphasized the utility of cross-examination in the process of determining whether entitlement to summary judgment has been established.
[9] In Butera v. Chown, Cairns LLP, 2017 ONCA 783, at paras. 26 to 34, Justice Pepall for the Court discussed the principles governing the granting of partial summary judgment:
[26] The pre-Hryniak appellate jurisprudence on partial summary judgment limited its availability. At para. 3 of Corchis v. KPMG Peat Marwick Thorne, [2002] O.J. No. 1437, 2002 CanLII 41811 (C.A.), this court applied Gold Chance International Ltd. v. Daigle & Hancock, [2001] O.J. No. 1486, [2001] O.T.C. 266 (S.C.J.) to state that
partial summary judgment ought only to be granted in the clearest of cases where the issue on which judgment is sought is clearly severable from the balance of the case. If this principle is not followed, there is a very real possibility of a trial result that is inconsistent with the result of the summary judgment motion on essentially the same claim.
[27] Since Hryniak, this court has considered partial summary judgment in Baywood Homes Partnership v. Haditaghi (2014), 120 O.R. (3d) 438, [2014] O.J. No. 2745, 2014 ONCA 450 and in Canadian Imperial Bank of Commerce v. Deloitte & Touche (2016), 133 O.R. (3d) 561, [2016] O.J. No. 6319, 2016 ONCA 922. Baywood was decided in the context of a motion for summary [page568] judgment on all claims, but where only partial summary judgment was granted. CIBC involved a motion for partial summary judgment.
[28] In both Baywood and CIBC, the court analyzed the issue from the perspective of whether (i) there was a risk of duplicative or inconsistent findings at trial; and (ii) whether granting partial summary judgment was advisable in the context of the litigation as a whole. In both cases, the court held that partial summary judgment was inadvisable in the circumstances.
[29] The caution expressed pre-Hryniak in Corchis is equally applicable in the post- Hryniak world. In addition to the danger of duplicative or inconsistent findings considered in Baywood and CIBC, partial summary judgment raises further problems that are anathema to the stated objectives underlying Hryniak.
[30] First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is also always the possibility of an appeal.
[31] Second, a motion for partial summary judgment may by very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing partial summary judgment motions.
[32] Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.
[33] Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial, therefore increasing the danger of inconsistent findings.
[34] When bringing a motion for partial summary judgment, the moving party should consider these factors in assessing whether the motion is advisable in the context of the litigation as a whole. A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in [page569] a cost-effective manner. Such an approach is consistent with the objectives described by the Supreme Court in Hryniak and with the direction that the Rules be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
V. ANALYSIS
[10] In the case at bar there has been no cross-examination on any of the affidavit evidence.
[11] I find that the Responding Parties have established the existence of a genuine issue requiring a trial with the respect to the claim on the guarantees.
[12] To be more precise, they have adduced evidence that the documentation that they accessed prior to signing the guarantees mentioned specifically that their liability could be limited individually to 25% of the loan. Moreover, they provided affidavit evidence that, after the signing of the guarantees, a representative of the Plaintiff, Manveer Saluga, assured them that their liability was so limited. The Moving Party offered no contradictory evidence from Saluga, nor did it cross-examine on this evidence.
[13] While Saluga’s assurance was, as noted by the Plaintiff, after the signature of the guarantees, the Responding Parties rightly point out that this evidence is supportive of the contention that they had reason to believe all along that their liability was limited to 25%.
[14] As noted at paragraphs 6.240 and 6.241 of Paul M. Perell and John W. Morden The Law of Civil Procedure in Ontario 4th edition (Toronto: LexisNexis Canada Inc. 2020), in cases calling for multiple findings of fact on the basis of conflicting evidence from a number of witnesses and many documents, summary judgment is not appropriate. A trial where witnesses can be cross-examined in the context of the documentation and their credibility assessed is necessary.
[15] In the case at bar those observations are apposite in respect of the claim on the guarantees.
[16] Further, both with respect to the claim on the credit card agreement and the claim in relation to the mortgage, the principles outlined above guiding the granting of partial summary judgment prevent the granting of the relief sought by the Plaintiff.
[17] The credit card contract arose in the same factual context as the guarantees. Granting summary judgment in respect of it would run the risk of duplication of fact-finding and inconsistent facts.
[18] Further, the Plaintiff alleges that Adam Zigomanis gave the mortgage in question to William and Mary Zigomanis as a fraudulent preference in respect of the debt he owed the Plaintiff on the guarantee. It is obvious, therefore, that the risk of duplication of fact-finding and inconsistent facts would arise if I granted summary judgment on the Zigomanis guarantee and a trial judge had to address the facts of the guarantee again as part of the trial of the attack on the mortgage.
[19] Accordingly, I dismiss the motion at bar.
VI. COSTS
[20] The Responding Parties seek costs of $18,434.18 on a full indemnity basis, $16,705.56 on a substantial indemnity basis, and $11,519.71 on a partial indemnity basis; they contend that costs ought to be awarded to them to assist them in financing the litigation.
[21] The Plaintiff submits that costs ought to be ordered in the cause because it acted reasonably in bringing the motion.
[22] I agree with the Plaintiff. Accordingly, I order that costs of the motion be in the cause.
Bloom, J.
DATE: July 7, 2021
COURT FILE NO.: CV-19-00001816-0000
DATE: 2021/07/07
SUPERIOR COURT OF JUSTICE – ONTARIO
RE:
The Toronto-Dominion Bank Plaintiff
- and -
Axis Freestyle Inc., Axis Freestyle Inc. o/a Axis Freestyle Academy, Simon Chang aka Simon Kok-Ping Chang aka Simon Kok Ping Chang, and Adam Zigomanis aka Adam C. Zigomanis, William Zigomanis aka Bill Zigomanis and Mary Zigomanis Defendants
ENDORSEMENT
Bloom, J.
DATE: July 7, 2021