Court File and Parties

COURT FILE NO.: CV-20-652054 DATE: 20210729 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Lifeline Litigation Loans Inc., Plaintiff AND: Ian St. Michael Holness, Defendant

BEFORE: Paul B. Schabas COUNSEL: Mehran Yazdani, for the Plaintiff Allan S. Blott Q.C., for the Defendant

HEARD: In writing, July 28, 2021

Endorsement

[1] This is a motion for summary judgment, made in writing in an action brought pursuant to the simplified procedures permitted under Rule 76 of the Rules of Civil Procedure.

[2] The plaintiff is a corporation which, between April 2017 and August 2018, advanced loans to the defendant, who was involved in personal injury litigation following a motor vehicle accident. The loan agreements provided that the loans would be repaid from the proceeds of the litigation. The loan agreements also provided that, if the defendant changed counsel in the litigation, the plaintiff could demand immediate repayment should the new counsel fail or refuse to undertake to repay the loans from any proceeds of the litigation.

[3] In November 2018 the defendant changed counsel, and the new counsel did not provide the required undertaking to the plaintiff. In November 2020 the plaintiff demanded repayment of the principal and interest owing and, when payment was not made, commenced this action.

[4] The amounts advanced to the defendant total $66,547.00. Interest accrued interest at a rate of 22% compounded semi-annually. The pre-judgment interest to July 26, 2021 totals $75,302.16.

[5] The defendant’s statement of defence, dated June 11, 2021, admits that he signed the loan agreements, but pleads that he was “subject to fraud and misappropriation of trust funds” by his lawyer, to whom he forwarded the funds.

[6] Counsel for the parties appeared in Civil Practice Court on June 30, 2021, at which time Diamond J. set a schedule for exchange of evidence, cross-examinations and factums in this summary judgment motion. Based on Justice Diamond’s endorsement, the defendant’s counsel indicated an intention to issue third party proceedings, which was not opposed by the plaintiff.

[7] On July 7, 2021, a Third Party Claim was issued by the defendant against his former lawyer.

[8] Rule 20.04(2)(a) of the Rules of Civil Procedure states that the Court shall grant judgment if "the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence." In Hryniak v. Mauldin, 2014 SCC 7, at para. 49, Karakatsanis J. stated:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the 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 proportionate, more expeditious and less expensive means to achieve a just result.

[9] In addition, each party on a motion for summary judgment must put its best foot forward with respect to the existence of facts that would raise a genuine issue requiring a trial: Ramdial v. Davis (Litigation Guardian of), 2015 ONCA 726, at paras 27 and 28.

[10] On this motion the plaintiff has provided uncontradicted and unchallenged evidence that the amounts sought are owing to it in accordance with the terms of the loan documents which the defendant admits, in the statement of defence, were signed by him. The plaintiff has also provided evidence that since at least March 2021 the defendant has been representing himself in the motor vehicle litigation and that he has settled a portion of that action; however, no funds have been received by the plaintiff pursuant to the loan agreements.

[11] What is put against the motion is a very recent affidavit from one of the defendant’s counsel in this litigation, dated July 16, 2021, stating that “it has recently come to the attention of counsel for the Defendant, Allan S. Blott Q.C., that the Defendant may have lacked legal capacity to provide instructions in regard to the handling of the main action as well as the Third Party Claim.” The affidavit states that the defendant has authorized Mr. Blott “to contact and obtain relevant clinical notes and records from one of the Defendant's treating medical practitioners in order to clarify whether there is indeed an issue with the Defendant's legal capacity to provide instructions on legal matters.”

[12] The affidavit goes on to say that the defendant is “currently the subject of a capacity assessment which is underway in relation to a separate matter,” and requests an adjournment of the motion “until the issue of legal capacity of the Defendant is resolved.”

[13] The issue of the defendant’s capacity was not raised in the statement of defence or by counsel at CPC Court on June 30, 2021. Nor does the affidavit from counsel for the defendant address whether the defendant lacked capacity when he signed the loan agreements. The affidavit provides very little information at all. There are no medical records, nor any details of the nature of the proposed assessment, including who will conduct it and when it may take place.

[14] An allegation of incapacity of a party often justifies an adjournment, and courts should proceed cautiously when incapacity is raised. In this case, the evidence of incapacity, or potential incapacity, is weak. It fails to address the issue of incapacity as a defence to the action, and the affidavit fails to articulate any defence to the action, even though counsel have been acting for the defendant on this matter for some period of time. Further, the plaintiff is concerned that the defendant may proceed to settle the balance of the motor vehicle litigation and dissipate the proceeds before it can recover its loans.

[15] In my view, the motion should be adjourned. The potential incapacity of the defendant may be preventing counsel from putting the defendant’s “best foot forward.” The defendant should be given some, albeit limited, time to address the issue. The plaintiff’s concern that the defendant may settle the balance of the motor vehicle action and dissipate funds is an issue of security, or lack of security, that arises from the loan agreements, and should not drive the court to an overly hasty judgment.

[16] The motion shall be adjourned on the following terms:

(a) the defendant shall deliver any additional evidence of incapacity and/or his response to the motion by September 3, 2021;

(b) the plaintiff may deliver any reply materials by September 17, 2021;

(c) cross-examinations, if any, shall be completed by September 27, 2021;

(d) factums, or supplementary factums, if any, shall be delivered in accordance with the Rules of Civil Procedure; and

(e) the motion shall be considered in writing during the week of October 18, 2021.

[17] Given the somewhat unusual circumstances, if necessary, counsel may seek a case conference with a judge for further directions. I am not seized of the matter.

Paul B. Schabas J.

Date: July 29, 2021