COURT FILE NO.: CV-19-614042-0000

DATE: 20211019

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Muhammad Umar Farooq Sharif

AND:

Mahebubbhai Shaikh et al.

BEFORE: J.T. Akbarali J.

COUNSEL: No one appearing, for the plaintiff J. Juda, for the moving party defendants Homelife/Miracle Realty Ltd. and Haren Ramanbhal Patel S. Siddiqui, for the responding party defendants Shehnazbibi Kathawala and Mahebubbhai Shaikh

HEARD: October 6, 2021

ENDORSEMENT

Overview

[1] On this summary judgment motion, the moving party defendants, Homelife/Miracle Realty Ltd. and Haren Ramanbhal Patel, ask me to dismiss a crossclaim levied against them by the responding party defendants, Shehnazbib Kathawala and Mahebubbhai Shaikh, on the basis that Ms. Kathawala and Mr. Shaikh signed a full and final release in favour of Homelife and Mr. Patel.

Brief Background

[2] Mr. Patel is a real estate agent with Homelife. He assisted Ms. Kathawala and Mr. Shaikh, who are spouses, in connection with two real estate deals. The first, a deal for the purchase of property known as 38 Pinery Trail in Toronto, did not close. After the agreement of purchase and sale was signed, Ms. Kathawala and Mr. Shaikh resiled from the deal. They say they did so because they learned the property has a history as a grow-op.

[3] That failed real estate deal is the genesis for the main action. The plaintiff, Mr. Sharif, was the vendor of 38 Pinery Trail. In the main action, Mr. Sharif claims special damages of $600,000, and general damages of $300,000. He argues that Ms. Kathawala and Mr. Shaikh breached the contract to purchase the property causing him damages in the form of a lower selling price, and causing him serious physical and psychological impairments for which he also seeks damages. The plaintiff alleges negligence against Ms. Kathawala and Mr. Shaikh, for, among other things, breaching a duty to comply with the terms of the agreement, and a duty to pay the agreed price for the property. He alleges Mr. Patel and Homelife were negligent and acted in breach of contract and in breach of their duty of the utmost care to him. The allegations levied against Mr. Patel and Homelife are mixed in with the allegations levied against Ms. Kathawala and Mr. Shaikh, and it is difficult to determine which allegations apply specifically to Mr. Patel and Homelife, but these might include failing to assist the plaintiff out of the economic loss and resulting physical and psychological harms he alleges he suffered.

[4] The plaintiff’s action names a number of other defendants, but has been resolved as against all defendants apart from Ms. Kathawala and Mr. Shaikh, and Mr. Patel and Homelife.

[5] Ms. Kathawala and Mr. Shaikh have cross-claimed against Mr. Patel and Homelife for contribution and indemnity. They allege that Mr. Patel and Homelife were negligent in performing their due diligence regarding the property before the agreement was signed, by failing to check previous listings for the property to determine if it had been used as a grow house, and by failing to ask other realtors about the history of the property.

[6] Mr. Patel and Homelife bring this motion for summary judgment, seeking to dispose of the entirety of the crossclaim on the basis that Mr. Patel paid Ms. Kathawala and Mr. Shaikh $20,000, representing a return of their deposit on the house at 38 Pinery Trail, in exchange for a full and final release in their favour, which Ms. Kathawala and Mr. Shaikh signed.

[7] The context in which the release was signed is as follows. After the first house deal fell apart, Ms. Kathawala and Mr. Shaikh looked for another home, and were again assisted by Mr. Patel and Homelife. They decided to purchase a home at 24 Fiddlehead Terrace in Toronto. However, their $20,000 deposit from the Pinery Trail deal had not been returned to them. Mr. Patel paid the $10,000 deposit they required to purchase Fiddlehead. He states he agreed to do so on the basis that his payment of the deposit would end all matters with Ms. Kathawala and Mr. Shaikh regarding the Pinery Trail property.

[8] The Fiddlehead Terrace property closed in October 2017. On November 29, 2017, Ms. Kathawala and Mr. Shaikh received a further $10,000 payment from Mr. Patel and executed a full and final release. It is witnessed by Mr. Jayesy Upadhyay, although his signature is dated November 20, 2017. Mr. Upadhyyay deposes that he wrote the wrong date in error. However, there is no question that the signatures on the release are those of Ms. Kathawala and Mr. Shaikh.

[9] It is at this point that the parties’ narratives diverge. Mr. Patel and Mr. Upadhyay depose that Mr. Patel offered Ms. Kathawala and Mr. Shaikh the opportunity to obtain legal advice with respect to the document, but that they chose to sign it in exchange for the funds. Ms. Kathawala and Mr. Shaikh state that they did not understand what they were signing. Moreover, they cast doubt on Mr. Upadhyay’s evidence, saying that they “highly doubt” he was present when they signed the full and final release. However, they also claim that they do not remember signing the release.

[10] Ms. Kathawala and Mr. Shaikh argue that they should not be held to the terms of the full and final release. They allege their English language skills are poor, and the document was not explained to them. They argue that they understood that Mr. Patel was providing them with the amount of their deposit from the 38 Pinery Trail transaction so they could buy Fiddlehead, a deal in which they were represented by Mr. Patel and Homelife, and which, as I have noted, did close. They say their agreement with Mr. Patel was that, once they received their original deposit back from Mr. Sharif, they would return it to Mr. Patel. They argue that they trusted Mr. Patel to act in their best interests, and never would have agreed to sign the full and final release had they understood its terms. In both written and oral argument, Ms. Kathawala and Mr. Shaikh relied solely on the defence of non est factum. At the hearing of the motion, their counsel confirmed they do not allege duress, unconscionability, or any other defence to avoid the full and final release.

[11] Following the argument of the motion, I wrote to counsel to seek further written submissions on two issues: first, whether the release in question extended to Homelife, and second, if it did not, would that impact whether summary judgment would be appropriate in this case. I sought these submissions because the release does not specifically mention Homelife. Rather, it says, in part:

…Shehnazbibi Kathawala and Mahebubbhai Shaikh (of the “First Part”), and Haren Ramanbhai Patel (of the “Second Part”) hereby release, acquit and forever discharge each other and their respective officers, directors, employees, servants, agents, representatives, successors, insurers, heirs and assigns, from all claims in law and in equity (which term includes counterclaims, crossclaims and claims over), …by reason of any cause, matter or thing in connection with all matters which were raised or could have been raised with respect to Agreement of Purchase and Sale dated April 6, 2017 for the property identified as 38 Pinery Tr., Toronto, Ontario.

[12] I received submissions from Mr. Patel and Homelife first, and a day later, received submissions from Ms. Kathawala and Mr. Shaikh. Mr. Patel and Homelife argued that the release covers Homelife directly, or alternatively, as a third party beneficiary. Ms. Kathawala and Mr. Shaikh argued that the release does not extend to Homelife, and that summary judgment is not appropriate because if their action against Homelife continues, Mr. Patel will have to continue to be involved.

[13] This motion thus raises three issues:

a. Is this an appropriate case for summary judgment?

b. Does the release extend to Homelife?

c. If so, are Ms. Kathawala and Mr. Shaikh bound by the release, or does non est factum apply to allow them to avoid its consequences?

Is this an appropriate case for summary judgment?

[14] In Hryniak v. Mauldin, 2014 SCC 7, the Supreme Court of Canada set out the approach to motions for summary judgment. The motion judge should first determine if there is a genuine issue requiring a trial based only on the evidence before her without using the fact-finding powers in the rule. If the summary judgment process provides the judge with the evidence required to fairly and justly adjudicate the dispute, and is a timely, affordable and proportionate procedure, there will be no genuine issue requiring a trial. If there appears to be a genuine issue requiring a trial, the judge should determine if the need for a trial can be avoided by using the fact-finding powers in the rule: Hryniak, at para. 66.

[15] In Malik v. Attia, 2020 ONCA 787, at para. 62, the Court of Appeal identified three questions that motion judges must ask of counsel in cases where partial summary judgment is sought:

a. Demonstrate that dividing the determination of this case into several parts will prove cheaper for the parties;

b. Show how partial summary judgment will get the parties’ case in and out of the court system more quickly;

c. Establish how partial summary judgment will not result in inconsistent findings by the multiple judges who will touch the divided case.

[16] Mr. Patel and Homelife argue that theirs is not a motion for partial summary judgment. Rather, if their motion is granted, notwithstanding the fact that they will remain as defendants in the main action, they will have disposed of an entire claim – the crossclaim. They liken the situation to Spiridakis v. Li, 2021 ONCA 359, at para. 14, where the main action and counterclaim was dismissed on summary judgment, leaving a third-party action ongoing. The Court of Appeal recognized the motion was not a motion for partial summary judgment, but nevertheless, it raised some of the same concerns. The Court of Appeal wrote:

This court has cautioned that 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 bifurcated from those in the main action and that may be dealt with expeditiously and readily in a cost effective manner: Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at para. 34. Since the respondents moved for judgment on their entire claim against the appellants, and dismissal of the counterclaim, their motion was not for partial summary judgment in the sense described in Butera. Although this was not a motion for partial summary judgment, it was nevertheless appropriate for the motion judge to consider whether the issues in the main action and the third party action were intertwined, such that there was a potential for inconsistent findings if judgment were granted in the main action in favour of the respondents, while the third party action proceeded.

[17] I conclude that, whether this is a motion for partial summary judgment, it is necessary to evaluate the appropriateness of the motion having regard to the questions identified in Malik, because whatever the result of the motion before me, Mr. Patel and Homelife will remain parties to the main action. Depending on my decision, it is possible that Homelife could remain a party to the crossclaim even if it were dismissed against Mr. Patel. The considerations identified in Malik have application to this case.

[18] In my view, this case may be appropriate for summary judgment. While there are some facts in dispute, they are not material to the analysis I must undertake. I am able to find the necessary material facts on the record. To the extent I must draw conclusions of credibility, I can do so having regard to the fact-finding powers in r. 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In doing so, I benefit from the fact that the evidence of all witnesses has been tested through cross-examination. Moreover, I can apply the law to the facts to reach a just determination.

[19] Having regard to the questions in Malik, I note the following:

a. The issues before me are discrete. First, does the release extend to Homelife? Second, can Ms. Kathawala and Mr. Shaikh avoid the full and final release on the basis of the doctrine of non est factum? These questions have nothing to do with the claims raised in the main action. There is no risk of inconsistent findings. Even responding counsel acknowledged that the issues around the release are discrete. He suggested that there was a risk of inconsistent findings of fact if I had to make findings regarding the negligence of Homelife or Mr. Patel on this motion, but the question of their alleged negligence is not before me. No one could articulate where a risk of inconsistent findings of fact might lie in this case, and I can see none.

b. Second, if this motion results in the determination of the crossclaim, the main action should move more quickly to resolution. Discoveries will be shortened. Trial time will be shortened. The process will be both, faster and cheaper for the parties.

c. However, a scenario in which Homelife remains a party to the crossclaim while Mr. Patel does not would not move the case more quickly or more cheaply to resolution.

[20] I thus conclude that summary judgment may be a proportionate, more expeditious and less expensive means to achieve a just result in this case. However, if the release does not extend to Homelife, summary judgment would be inappropriate because it would not shorten the process or make it more efficient or less expensive. I thus turn to the analysis of the scope of the release.

Does the release extend to Homelife?

[21] To determine whether the release extends protection to Homelife, I must interpret the release. The Supreme Court of Canada has articulated the principles the court must bring to contractual interpretation in Sattva Capital Corp v. Creston Moly Corp., 2015 SCC 53, at para. 47, These include:

a. The interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction to determine the intent of the parties and the scope of their understanding.

b. The court must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.

c. The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement.

[22] In this case, all the allegations in the crossclaim made against Homelife are also made against Mr. Patel. The allegations turn on Mr. Patel’s actions and conduct. Although vicarious liability is not specifically pleaded, one can only understand the claims against Homelife to be derived from its responsibility for Mr. Patel’s actions.

[23] What, then, is the impact of a release of Mr. Patel? Ms. Kathawala and Mr. Shaikh have not identified a free-standing cause of action against Homelife. If Mr. Patel is released from the claims against him, can Homelife remain responsible for his conduct?

[24] I note that the release identifies the scope of claims released to include counterclaims, crossclaims and claims over. Moreover, it includes a term that Ms. Kathawala and Mr. Shaikh would not “make any claim or take any proceedings against any other person or corporation who might claim contribution or indemnity under the provisions of any statute or otherwise from the corporations and individuals discharged by this Release.” If the release were limited to Mr. Patel, and Homelife remained in the crossclaim, Homelife could claim over against Mr. Patel, and the court would be faced with a motion seeking a dismissal of the crossclaim against Homelife on the basis that Ms. Kathawala and Mr. Shaikh had a contractual obligation to Mr. Patel not to sue Homelife. What would be the point in requiring additional motions, when (assuming the release is valid), that result is plain on the face of the release?

[25] Moreover, the contribution and indemnity clause refers to “the corporations and individuals discharged by this Release.” The first paragraph of the release also refers to “directors,” and “officers.” If the only parties contemplated by the release are individuals, there is no need for this language in the release. The language suggests that Homelife – the only corporation involved in the dealings between Mr. Patel, Ms. Kathawala and Mr. Shaikh related to Pinery Trail – was contemplated to be covered by the release.

[26] The release also provides protection for “insurers,” and in this case, Mr. Patel and Homelife have the same insurer. The insurer has been released by the release. What would the point of that be if the insurer was responsible for Mr. Patel’s conduct anyway, through the alleged liability of Homelife?

[27] The expectation that the release included Homelife is supported by the fact that Ms. Kathawala and Mr. Shaikh never alleged that the release did not cover Homelife until I raised the issue, after argument of the motion.

[28] A practical, common sense approach to understanding the parties’ intention, reading the release as a whole, and in the context of the surrounding circumstances, described above, leads to the conclusion that, assuming the release is not avoided by the doctrine of non est factum, the release confers protection on Homelife, as an entity contemplated by the release, by operation of the crossclaim provision, and by the release of the insurer.

[29] Having reached this conclusion, it is appropriate to consider the applicability of the doctrine of non est factum to the release to determine if summary judgment should be granted.

Does non est factum apply?

[30] The defence of non est factum is available to “someone who, as a result of misrepresentation, has signed a document mistaken as to its nature and character and who has not been careless in doing so”: Bulut v. Carter, 2014 ONCA 424, at para. 18, citing Marvco Color Research Ltd. v Harris, 1982 63 (SCC), [1982] 2 S.C.R. 774; see also The Guarantee Company of North America v. Ciro Excavating & Grading Ltd., 2016 ONCA 125, at para. 14

[31] As De Sa J. recently noted, the approach to the defence of non est factum is “based not only upon the principle of placing the loss on the person guilty of carelessness, but also upon a recognition of the need for certainty and security in commerce”: Alphera Financial Services Canada (BMW Canada Inc.) v. Ambihaipalan, 2021 ONSC 3530, at para. 33.

[32] I conclude, without regard to my extended fact-finding powers, that the defence of non est factum is not available to Ms. Kathawala and Mr. Shaikh. Even on their own evidence, they were careless in signing the release.

[33] In particular, neither Ms. Kathawala nor Mr. Shaikh give evidence that they read the agreement. They blame the agent for not explaining to them in Gujarati, a language all three speak, what they were signing. They offer no evidence that they asked what the document was, asked for time to take it to their Gujarati-speaking lawyer who they had been dealing with on their recent house purchase, or asked for time to have someone else translate it for them. All Mr. Shaikh deposes is that he would sign wherever Mr. Patel told him to sign. On cross-examination, Ms. Kathawala stated that she “[didn’t] know anything about it when he got our sign on this paper.” That behaviour is careless.

[34] Although they attempt to explain their lack of care with respect to signing the document by deposing that “between August and November 2017, [Mr. Patel] provided lots of papers for us to sign [for the Fiddlehead Terrace property]”, that is not accurate. The Fiddlehead Terrace deal closed in October 2017. The only document that Ms. Kathawala and Mr. Shaikh signed in November – at least a month after closing – was the full and final release. They thus were asked by the agent to sign a single document, at least a month after their house closing, and in exchange, they received $10,000. The record leaves no doubt that the cheque was provided contemporaneously with the signing of the release. Originally, Ms. Kathawala and Mr. Shaikh indicated that Mr. Patel did not provide any funds to them directly. On cross-examination they admitted that they had, in fact, received $10,000 from Mr. Patel directly. It defies common sense to think that Ms. Kathawala and Mr. Shaikh signed a single document a month after their house closing and at the same time received a $10,000 cheque without considering the purpose of the document they were signing. If they did not understand the document, and did not ask what it was, they were careless in not doing so.

[35] On cross-examination, Mr. Shaikh testified that Mr. Patel would get their signatures on documents, and promise to explain them later, but never did. When counsel tried to drill down to find out when that had happened, and why, if Mr. Patel was breaking his promise to explain documents, Mr. Shaikh continued to sign documents without explanation, Mr. Shaikh danced around the question.

[36] Failing to read a document, ask questions about it, ask for an opportunity to obtain independent legal advice about it, ask for a translation of it, or to ask to speak to a friend about it is careless: The Guarantee Company of North America, at para. 14, Bulut, at para. 20, Alphera Financial Services, at para. 339.

[37] On Ms. Kathawala’s and Mr. Shaikh’s own evidence, they were careless. The defence of non est factum is not available to them.

[38] Moreover, using my extended fact-finding powers, I conclude that there was no misrepresentation inducing Ms. Kathawala and Mr. Shaikh to sign the full and final release. I note that, on this motion, they have the obligation to put their best foot forward, and I am entitled to assume that the evidence before me is all the evidence they would adduce at trial: Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 26, aff’d 2014 ONCA 878. They claim the misrepresentation is that Mr. Patel told them he was providing them with the money, and when they received their deposit back, they would return it to him. Their counsel argued that they understood the document they were signing was in furtherance of that alleged agreement.

[39] Neither party’s affidavit gives the evidence that they believed the document they signed on November 29, 2017 was in furtherance of an agreement to return $20,000 to Mr. Patel once they received their deposit back from the plaintiff. That is crucial evidence if it is true; one would expect it to be in the parties’ affidavits.

[40] On cross-examination, Ms. Kathawala insisted that their signatures were indicating their agreement to refund or return the $20,000. That is the only thing that she claims to remember about signing the document. Although they “highly doubt” the witness was present, neither Ms. Kathawala nor Mr. Shaikh firmly depose that he was not. They cannot remember where the release was signed. There is no evidence of any misrepresentation made by Mr. Patel – as distinct from Ms. Kathawala’s evidence about her understanding of the document – that induced them to sign the release at the time it was signed. Ms. Kathawala does not remember receiving $10,000 from Mr. Patel at the time the document was signed.

[41] I reject Ms. Kathawala’s and Mr. Shaikh’s evidence about this alleged misrepresentation. It is too convenient that the only thing Ms. Kathawala remembers is her impression about what she claims she thought she was signing, without any particulars of the alleged misrepresentation, and no recollection about the exchange of signatures for money. I find that the claim that Mr. Patel represented the document to be in furtherance of an agreement to return the $20,000 to him on the return of their deposit is an after-the-fact rationalization.

[42] In addition, Ms. Kathawala and Mr. Shaikh had signed a full and final release just a few months before in an attempt to resolve things with Mr. Sharif. In her affidavit, Ms. Kathawala states that Mr. Patel asked them “to sign a mutual release with the plaintiff to get back our deposit of $20,000.” She indicates that they signed the release. At no point does she depose that she did not understand what it was. In her cross-examination, she indicates that “what he wrote down on the paper, we don’t know.” This is not consistent with the evidence in her affidavit, where she does not suggest she did not understand the import of a full and final release. Given that the effect of a release is at the heart of this motion, I find it difficult to believe that she omitted what would have been important evidence from her affidavit. Moreover, later in her cross-examination, she stated that Mr. Patel told her she would get her deposit back and “we will be released from this house when we sign this paper.” I thus reject Ms. Kathawala’s and Mr. Shaikh’s evidence that they did not understand the first full and final release that they signed in their efforts to resolve things with the Mr. Sharif. Having understood the first full and final release, they would have also understood the import of the second full and final release.

[43] Thus, I reject Ms. Kathawala’s and Mr. Shaikh’s argument that they were induced to sign the release by misrepresentation.

[44] Without a misrepresentation, and in the face of their carelessness, the defence of non est factum is not available. It follows that the release is of full force and effect, and the crossclaim that Ms. Kathawala and Mr. Shaikh have launched against Mr. Patel and Homelife is barred by the release and must be dismissed.

Costs

[45] Mr. Patel and Homelife are the successful parties on this motion. They have filed a costs outline supporting all-inclusive partial indemnity costs of $13,346.14, and substantial indemnity costs of $19,171.85. The costs outline appears to relate to the motion rather than the entirety of the crossclaim, which I assume reflects the fact that, other than the motion, the moving parties’ costs relate to the main action.

[46] Ms. Kathawala and Mr. Shaikh filed their costs outline, late. Their costs outline seeks fees of $1,412.50 plus HST and $408.50 in disbursements. It appears that these fees are calculated on a partial indemnity scale using an hourly rate of $150/hr for counsel, who is a 2003 call. The rate is unusually low. Moreover, it does not appear that this costs outline captures all the time counsel spent on the file. For example, the costs outline claims costs for two hours for “preparation for and attendance at examinations.” A review of the transcripts of the cross-examinations indicates that counsel spent almost five hours in examinations, and this does not include any time for preparing for the cross-examinations he conducted, or preparing his clients for their cross-examinations. I make no comment as to whether the bill of costs represents the actual costs incurred by Ms. Kathawala and Mr. Shaikh, but I find that it underrepresents their reasonable costs of this motion.

[47] The three main purposes of modern costs rules are to indemnify successful litigants for the costs of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330, at para. 22.

[48] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The court exercises its discretion taking into account the factors enumerated in r. 57.01 of the Rules of Civil Procedure, including the principle of indemnity, the reasonable expectations of the unsuccessful party, and the complexity and importance of the issues. Overall, costs must be fair and reasonable: Boucher v. Public Accountants’ Council for the Province of Ontario, 2004 14579 (Ont. C.A.), 71 O.R. (3d) 291, at paras. 4 and 38. A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), 2002 CarswellOnt 4020, 118 A.C.W.S. (3d) 341 (C.A.), at para. 4.

[49] I see no reason to award anything other than partial indemnity costs in this case. None of the parties has drawn my attention to any offers to settle that might be relevant, and there is no suggestion that either side has behaved unreasonably in the litigation.

[50] With respect to quantum, I accept that the issues raised in this motion were important to the parties. I note that moving parties’ counsel has used reasonable partial indemnity rates in calculating costs. However, the hours spent by counsel for the moving parties seem higher than necessary, and responsibilities on the brief appear to have been weighted towards work performed by the more experienced, and thus more expensive, timekeeper.

[51] Considering these factors, I conclude that costs of $11,500, all inclusive, are fair and reasonable in the circumstances. I reach this conclusion notwithstanding the fact that these costs are significantly higher than those claimed on the responding parties’ bill of costs. The responding parties’ bill does not represent their reasonable expectations of costs, given that it appears to have significantly understated the value of legal representation on this motion.

Conclusion

[52] The moving parties’ motion for summary judgment is granted. The crossclaim of Ms. Kathawala and Mr. Shaikh is dismissed.

[53] Ms. Kathawala and Mr. Shaikh shall pay the moving parties their costs of this motion in the amount of $11,500, all inclusive, within thirty days.

J.T. Akbarali J.

Date: October 19, 2021