COURT FILE NO.: 2114/18
DATE: 20210812
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
B2B Bank
Plaintiff/Defendant by Counterclaim
– and –
Manirul Islam
Defendant/Plaintiff by Counterclaim
M. Cassone for the plaintiff/defendant by Counterclaim
A. Hussain for the defendant/plaintiff by Counterclaim
HEARD: February 17, 2021
MCARTHUR, J.
INTRODUCTION
[1] The plaintiff loaned moneys to the defendant in 2006 when it was then known as AGF Trust. These funds were advanced to buy securities for the plaintiff as arranged by an investment advisor.
[2] The defendant regularly received monthly distribution statements thereafter from the plaintiff. In June of 2018, the defendant defaulted on the payment obligations owing to the plaintiff.
[3] The defendant then contacted the plaintiff and indicated that he would no longer remit payments to the plaintiff and alleged a fraud by the investment advisor.
[4] The plaintiff applied the securities that were pledged by the defendant as collateral pursuant to the loan agreement, leaving a deficiency of $163,936.83 as of September 21, 2016.
[5] The plaintiff commenced an action and brings a motion for summary judgment for the deficiency and the dismissal of the counterclaim.
[6] The defendant claims his investment advisor was an agent or employee of the plaintiff, that he was a victim of a deceit and fraud, he did not receive independent legal advice and advances the defence of non est factum in relation to the loan agreement.
ISSUE
[7] The central issue is whether there is a genuine issue that requires a trial.
POSITIONS OF THE PARTIES
[8] The defendant submits that there are genuine issues that require a trial. At the hearing, he narrowed the legal issues in dispute to (1) the relationship between the defendant and the plaintiff, (2) independent legal advice, and (3) the crucial role of Mr. Lam, the investment adviser. He submits this is a complex situation and a trial is required for the judge to develop a fuller appreciation of the relationships and the transactional context, rather than on a motion where he states there is a risk of inconsistent findings in relation to the promissory note and a "Third Release".
[9] The defendant submits that the plaintiff's affidavit evidence does not provide the court with confidence in regard to the facts in relation to the legal issues and principles in the proceedings and, further, the issue of independent legal advice given by a specific lawyer cannot lend itself to a determination at this time.
[10] The plaintiff submits that there are no genuine issues that require a trial. The plaintiff submits that the investment advisor was neither an employee nor agent of the plaintiff and that the defendant has operated on an erroneous assumption, the signed loan and other documents speak for themselves and there is no case for the defence of non est factum to apply.
[11] I find that there are no genuine issues requiring a trial. Summary judgment shall be granted in favour of the plaintiff for the reasons that follow.
THE LAW
Summary Judgment
[12] Summary judgment motions are governed by Rule 20.04 which states:
(2) The court shall grant summary judgment if,
the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence;…
(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.
(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.
[13] The leading case on summary judgment is Hryniak v. Mauldin, 2014 SCC 7. At para. 66, Karakatsanis J. for the court wrote:
On the motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
[14] Thus, the judge hearing the summary judgment motion must ask:
a) On the basis of the evidentiary record alone, are there genuine issues that require a trial?
b) Does the evidentiary record provide the evidence needed to "fairly and justly adjudicate the dispute"?
[15] In Hryniak, the test for summary judgment was stated at para. 49 as follows:
"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."
[16] The onus of establishing that there is no genuine issue requiring a trial rests on the moving party. Where the moving party establishes that there is no genuine issue requiring a trial, the evidentiary onus shifts to the responding party to establish that there is a genuine issue requiring a trial: Sweda Farms Ltd. v. L.H. Gray & Son Ltd., 2014 CarswellOnt 11926 (ON CA) at para. 26; New Solutions Extrusion Corp. v. Gauthier, 2010 ONSC CarswellOnt 913 at para. 12.
[17] A responding party must set out in affidavit material or other evidence the specific facts that establish that there is a genuine issue requiring a trial. The responding party cannot rest on mere denials of allegations of a party's pleading: Sweda, para. 27. It is not enough to allude to evidence that may be adduced in the future. A party must put its best foot forward, lead trump or risk losing: Sweda, para. 28.
[18] The judge hearing the motion must:
a) determine the motion on the pleadings and evidence actually before the court on the motion. The judge is entitled to assume that the record contains all the evidence that would be adduced at trial; and
b) take a hard look at the evidence and the merits of the action at this preliminary stage: Sweda, paras. 26-28.
Partial Summary Judgment
[19] Where a party seeks partial summary judgment, the motion judge must assess the advisability of the summary judgment process in the context of the litigation as a whole: Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 at paras. 35. The motion judge must consider whether the factual findings necessary to determine the motion are so intertwined with the remaining issues that those determinations on the motion risk inconsistent findings later and substantive injustice: Baywood Homes Partnership, para. 37. Given what remains to be determined, it may be more fair, efficient and just for those findings to be made once in the context of the trial.
[20] In R. v. Butera, 2017 ONCA 783 the Ontario Court of Appeal reviewed the appropriateness of partial summary judgment in the situations of resolving a case on conflicting evidence and the dangers of inconsistent findings. The court reiterated its earlier direction in Corchis v. KPMG Peat Marwick Thorne, 2002 CanLII 41811 (ON CA), [2002] O.J. No. 1437 (C.A.) 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. The court observed that 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.
ADDITIONAL BACKGROUND
[21] On August 28, 2006, the defendant signed and submitted a loan application with the plaintiff for $350,000. He signed an investment account application in the presence of Alex Lam, a financial advisor working for World Financial Group, and also signed trade tickets in Mr. Lam's presence to purchase specific securities that were ultimately acquired by him.
[22] The defendant required the plaintiff obtain ILA – independent legal advice. An Independent Legal Advice Certificate was produced dated September 7, 2006 by Barry Poulson, a lawyer, which expressly states, acknowledges and declares by the defendant that "all statements made in the forgoing certificate are true and correct". Mr. Poulson certified he "met with and advised the client (the defendant) with respect to the above noted matter."
[23] The defendant also provided the plaintiff with a copy of a void cheque to facilitate the automatic withdrawal of payments from the defendant's bank account with the plaintiff.
[24] On September 20, 2006, the plaintiff approved the loan agreement for the principal amount of $350,000.00. All the funds were advanced by the plaintiff and all the funds were soon after invested as directed by the defendant. The specific securities obtained by the defendant were pledged as required in the loan agreement.
[25] The defendant acknowledged the welcoming letter received from the plaintiff as well as the account statements every six months as well as the monthly distribution statements over the many years since.
[26] The defendant defaulted on the payment obligation on June 20, 2018. In July, the defendant advised that he would not remit payments under the loan and alleged fraud and that his lawyer was dealing with WFG. The plaintiff immediately made demand for payment to the defendant.
[27] The pledged securities were redeemed in the amount of $161,124.81. This left a deficiency owing to the plaintiff of $163,936.83 as of September 21, 2016.
ANALYSIS AND DISCUSSION
Relationship between the plaintiff and the defendant
[28] The defendant submitted that World Financial Group (WFG) and B2B Bank (formerly AGF Trust) are related in their business and that Mr. Lam was the plaintiff's representative.
[29] The defendant submits that Mr. Lam misled the defendant to sign an agreement for investment, the defendant never signed the collateral agreement for investment with AGF Trust Company, he was misled and manipulated by Mr. Lam to sign the trade ticket and that the information in the trade ticket was false and manipulated by Lam.
[30] The plaintiff submits the defendant's case is based on erroneous assumption that Mr. Lam is an employee of the plaintiff and that this is simply a debtor and creditor relationship.
[31] There is no evidence that Mr. Lam was an employee of the plaintiff.
[32] Vicarious liability is the law's imposition of responsibility on a person for the tort of another even though the first person did not commit the act which constitutes a wrong. The defendant is required to prove two things:
• That the relationship between the tortfeasor and against the person whom liability is sought is sufficiently close to make a claim for liability appropriate; and
• The tort is sufficiently connected to the tortfeasor's assigned tasks that the tort can be regarded as a materialization of the risks created by the enterprise.
[33] These are the following factors to be considered by the court on the issue of vicarious liability:
• the opportunity afforded the employee by the enterprise;
• the furtherance of the employers aims;
• the extent to which the wrongful act was related to the employer's enterprise;
• the power which the job conferred on the employee over the defendant; and
• the victim's vulnerability.
[34] Firstly, there is no evidence by the defendant that the plaintiff had a relationship with Mr. Lam, AGF or WFG that could support an employee or agent relationship. The submission of the defendant is without a sufficient evidential basis as to vicariously liability or any agency relationship between the plaintiff and Mr. Lam. As is mentioned in many cases, the defendant must put his best foot forward.
[35] Secondly, the evidence of the plaintiff through it's representative, Brian Jahoor, clearly establishes that there was no agency or relationship between Mr. Lam and the plaintiff. Mr. Lam was an advisor with the investment company, WFG, World Financial Group that is not part of AGF Trust (now B2B Bank).
[36] Furthermore, the terms and conditions of the loan agreement between the defendant and the plaintiff expressly provided, among other things, that "AGF Trust is not responsible for the actions of any promoter, underwriter, broker or salesperson or any other person acting in respect of this agreement. You acknowledge that your obligation to repay the loan and other amounts required under this agreement is an obligation to AGF Trust, separate and independent from your relationship with the investment advisor/agent, without right of set off for any defence based on advice received from the investment advisor/agent or any other third party".
[37] This court finds that the relationship between the plaintiff and the defendant is not a genuine issue that requires a trial. Rather, this court finds that the relationship between the defendant and plaintiff is that of a debtor and creditor.
[38] I am able to make the necessary findings of fact in respect of the nature of the relationship between the parties and apply the law to the facts.
Independent Legal Advice
[39] The defendant submitted that he never met in the office with the lawyer, Barrie Poulson, that Mr. Lam misled the defendant to sign a blank independent device form and that the plaintiff had deceitfully arranged ILA for the defendant. The defendant also submitted that Mr. Poulson's office is located in Sudbury and did not sign the ILA in the office of Mr. Poulson.
[40] This court also observes that neither Mr. Lam nor Barrie Poulson were made a party to this action at any point by the defendant, even as a necessary and proper party for evidential reasons.
[41] The defendant does admit that he signed the certificate of ILA in the presence of Mr. Lam and reviewed the loan application and terms and conditions with Mr. Poulson over the phone. The defendant does admit on his examination for discovery that he did not have any documentation to suggest that the plaintiff deceitfully arranged the ILA and that Mr. Poulson did not suggest he was acting for the defendant. The most reasonable inference to be properly made is that the defendant was, at the very least, careless when he signed the loan agreement and the Certificate of ILA in blank.
[42] In this case, the defendant did not raise any issue as to fraud until July 23, 2018. The loan agreement had been signed by the defendant on August 28, 2006 and the Certificate of ILA on about September 7, 2006. The funds were then advanced for the defendant on September 20, 2006. It was almost twelve years after receiving the initial welcome letter, semi-annual reports and monthly distributions from the plaintiff, that the defendant first raised any issue of fraud. Again, the defendant must put his best case forward. This court cannot give the defendant any credit for not raising any issue of fraud until almost twelve years later particularly where no explanation is offered by the defendant why he did not previously call the plaintiff and say this transaction was a fraud.
[43] In this case, nothing turns on whether the defendant went to the office of Mr. Poulson or not. The certificate signed by the defendant clearly specifically states "all the statements made in the foregoing certificate are true and correct". There was never, prior to July 23, 2018, any effort by the defendant to communicate, clarify or correct any concerns if it was in any way a misstatement by the defendant nor was any other explanation provided by the defendant. Furthermore, once Mr. Poulsen's file was obtained by the plaintiff, the file included correspondence from Mr. Poulsen addressed to the defendant dated September 7, 2006 that confirms that Mr. Poulson provided ILA to the defendant on the AGF Trust loan application including its terms and conditions and the collateral agency (pledge) agreement.
[44] Whether Mr. Lam did or did not mislead the defendant to sign the certificate of ILA in blank, this has no bearing on the case in view of the creditor and debtor relationship between the defendant and plaintiff. There is not a scintilla of evidence of the plaintiff arranging or deceitfully arranging ILA with Mr. Poulson. Finally, as mentioned, I find that nothing turns on whether the defendant personally attended at the office of Mr. Poulson.
[45] In the circumstances of this case, I am able to make the necessary findings of fact in respect of the certificate of ILA and apply the law to the facts.
Non Est Factum
[46] The defence of non est factum in relation to the loan agreement may be available where the defendant has been misled into signing a contract that is fundamentally different from what he thought was being signed. To be successful, the defendant would have to establish all of the following:
• the contract is fundamentally different from that which he intended to sign;
• he did not consent to the contract as such; and
• he did not sign the contract due to carelessness.
[47] On the evidence before this court, there is no evidence that the loan and/or pledge agreements were fundamentally different from that which the defendant intended to sign. In view of this finding, it is unnecessary to deal with either of the remaining points suffice to say that it is likewise doubtful that the defendant's evidence could satisfy either of the remaining requirements. I find that the defence of non est factum simply could not be established on these facts.
[48] I am able to make the necessary findings of fact in respect of the defence of non est factum and readily apply the law to the facts.
[49] In relation to each and all of these issues, this clearly is the most expeditious and less expensive means to achieve a just and proper result. There are no genuine issues for trial in respect of these issues.
Counterclaim by the defendant
[50] The defendant submitted in it's factum that issues of credibility on the ILA remain to be determined including the claims by the defendant in the counterclaim, among other factual features. For these issues, the defendant indicates that the case does not readily lend itself to a determination by means of summary judgment.
[51] The mere fact that a counterclaim is brought ought not elevate the defendant's submissions where there is little to no supporting evidence. To do otherwise would be contrary to the underlying policy, principles and rule in relation to summary judgment.
[52] Once the moving party, here the plaintiff, has discharged its evidentiary burden of proving there is no genuine issue requiring a trial for its resolution, then the burden shifts to the responding party to prove his claim has a real chance of success. The defendant, as responding party, has not proven his claims have a real chance of success.
Summary and Conclusions
[53] In this case, the need for trial can be avoided by using the discretionary fact-finding powers of this court on the record presented. This court is able to make the necessary findings of fact as referred to above and apply the law to the facts. This clearly is the most expeditious and less expensive means to achieve a just and proper result in relation to each of the issues.
[54] As outlined in these reasons, there are no genuine issues requiring a trial involving the moving plaintiff.
[55] There shall be an order granting summary judgment in favour of the plaintiff in the amount of $163,936.83 as of September 21, 2016 plus interest at 6.1 per cent and dismissing the defendant's counterclaim against the plaintiff.
[56] If the parties cannot agree as to costs, the moving plaintiff may submit brief written submissions within 14 days. The defendant may submit brief written submissions 14 days after receipt of the moving plaintiff's submissions.
"Justice M.D. McArthur"
Justice M.D. McArthur
Released: August 12, 2021
COURT FILE NO.: 2114/18
DATE: 20210812
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
B2B Bank
Plaintiff/Defendant by Counterclaim
– and –
Manirul Islam
Defendant/Plaintiff by Counterclaim
REASONS FOR JUDGMENT
McArthur J.
Released: August 12, 2021