Court File and Parties

Court File No.: CV-17-00000206-0000 Date: 2022-04-20 Superior Court of Justice – Ontario

Between: MENNIE MANANGAN (Plaintiff) And: VIJAYATHASA SHANMUNGAM, ETHIRNAYAGAM RASONAYAGAM and 2166729 ONTARIO INC. (Defendants)

And Between: 2166729 ONTARIO INC. (Plaintiff by Counterclaim) And: MENNIE MANANGAN (Defendant by Counterclaim)

Before: McSWEENEY J.

Counsel: A. Jain for the Plaintiff / Defendant by Counterclaim A. Sidhu, for the Defendants / Plaintiff by Counterclaim

Heard: April 6, 2022, via Zoom, Brampton, ON

Reasons for Judgment

Overview

[1] The Plaintiff by Counterclaim (Defendant), 2166729 Ontario Inc. [“216”] moves for summary judgment on three vendor-takeback mortgages granted by Mennie Manangan, the Defendant by Counterclaim (Plaintiff). The mortgages were given by Ms. Manangan in 2013 to secure part of her purchase of a restaurant business from 216. The individual named Defendants are the principals of 216.

[2] The background facts are as set out at paragraphs 2-13 of the factum filed by s216.

[3] The total amount owing on the mortgages, before interest, is $155,000. It is common ground that Ms. Manangan granted all three mortgages to 216, and then made no payments at all, defaulting on all three.

[4] It is relevant to note that although Ms. Manangan incorporated a company (“237”) to purchase the restaurant business from 216, she granted the mortgages in her own name and brings this action on her personal behalf.

[5] The mortgages were all secured against Ms. Manangan’s home (“the Property”). That Property was sold under power of sale in 2015 by the first mortgagee, Home Trust. Home Trust paid the remaining sale proceeds of $121,759.80 [“Sale Proceeds”] into court in Hamilton in May 2016. Both parties moving before me today seek payment of the Sale Proceeds out of court to their credit.

[6] Ms. Manangan has refused since 2016 to agree to disbursal of the sale proceeds to 216. Instead, she started her own action against the 216 and its principals on January 16, 2017. On February 10, 2017, 216 and its principals filed their Statement of Defence. In the same pleading, 216 sought mortgage enforcement by way of Counterclaim against Ms. Manangan.

[7] Ms. Manangan’s claim is for $1 million in damages. She pleads breach of contract, fraud, bad faith, and intentional interference with economic relations against the 216 and its principals in their role as vendors of the restaurant business. She also claims $100,000 in punitive damages “for committing the said lost” [sic – loss].

[8] The record confirms that Ms. Manangan has taken no steps to advance her action since 2017. She has failed to file her affidavit of documents or adhere to a Discovery Plan. Her motion today, seeking disbursal of the Sale Proceeds to herself, is the first step she has taken since 2017.

Parties’ positions on the motions before me

[9] Ms. Manangan asks the court to order disbursal to her of some or all of the Sale Proceeds. She resists summary judgment on her claim, and on the counterclaim brought against her, on the basis that there are issues which must go to trial which cannot be determined on the record as filed.

[10] The Defendants seek summary judgment dismissing the Ms. Manangan’s claim on the bases that: the claim is without merit; Ms. Manangan is not the proper party, lacking standing to sue in her own name for alleged breaches of the restaurant purchase contract because the purchaser was her company, 237, not herself; and that claims regarding the restaurant purchase in 2013 were statute-barred by the time Ms. Managan started her claim.

[11] 216 also asks the court to enforce the terms of the mortgages given by Ms. Managan by granting summary judgment on their Counterclaim.

Legal Framework for Summary Judgment

[12] The availability of summary judgment is governed by Rule 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and the Supreme Court’s guidance in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87. The law is clear: Summary judgment should be granted where the court is able to determine on the record before it that there is no genuine issue requiring a trial.

[13] This will be the case where the evidence enables the court to: (1) Make the necessary findings of fact; (2) Apply the law to the facts; and (3) Where the court determines that summary judgment is a proportionate, more expeditious, and less expensive means to achieve a just result on the merits.

[14] Certainly, if the record enables me to find the necessary facts and apply the law in this case, summary judgment will be a proportionate, more expeditious, and less expensive means to achieve a just result than for this action and counterclaim to proceed to a trial.

[15] At the first step of the motion, the onus is on the moving party to establish a prima facie case that there is no genuine issue requiring a trial.

[16] If the moving party discharges this primary onus, the evidentiary burden shifts to the responding party to adduce evidence of specific facts from which the court can find a genuine issue requiring a trial.

[17] The law is clear that in order to meet this onus, the responding party may not rest solely on the allegations or denials in their pleadings, but is obligated to set out, “in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial”: Rule 20.02(2).

[18] A 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, at paras. 26-27, aff’d 2014 ONCA 878, leave to appeal refused [2015] S.C.C.A. No. 97.

[19] This means that a responding party cannot simply advise that further or better evidence of a genuine issue requiring a trial may be available at a future time. At the summary judgment motion, the responding party must “lead trump or risk losing” and put their “best foot forward”: Whiteman v. Iamkhong et al., 2013 ONSC 2175, at paras. 29-31, aff’d 2015 ONCA 564.

Analysis and conclusions

Plaintiff’s motion for payment of Sale Proceeds

[20] The evidence and argument do not support Ms. Manangan’s claim to payout of any of the Sale Proceeds in priority to her creditors. The quantum of Sale Proceeds in court is less than the total of the three mortgages granted by Ms. Manangan, even without calculation of interest charges.

[21] Ms. Manangan’s counsel changed his proposal during the course of the argument on the motion between his opening and reply submissions, each time decreasing the amount of the Sale Proceeds which Ms. Manangan was claiming, with a corresponding increase in the amount she proposed should be released to the Plaintiffs by Counterclaim.

[22] The Plaintiff failed to establish a basis for entitlement to payment of any of the Sale Proceeds to herself in priority to her secured creditors.

[23] The Plaintiff’s motion for an order paying out Sale Proceeds to her is dismissed accordingly.

Ms. Manangan’s position on the “Genuine issue for Trial” in the Main Action

[24] Ms. Manangan argues that a trial is required to decide the merits of her $1 million claim against the Defendants because the following issues cannot be determined on the present record, or are otherwise in dispute:

a. One of the $20,000 mortgages was obtained by misrepresentation, as the Defendants have failed to prove that 216 paid the restaurant’s landlord $20,000 on the purchaser’s behalf as part of the restaurant sale to 237; b. The court requires evidence of the lease agreements related to the sale of the restaurant business to 237, which the Defendants failed to file in their record; c. The Defendants have refused to provide further bank statements relevant to the issue of 237’s entitlement to further post-closing adjustments in the restaurant business sale; d. In 2014 the Defendants refused to permit Ms. Manangan to take additional time to attempt to refinance after she defaulted on the mortgages.

[25] Having considered the parties’ submissions, and the records as filed, I find as follows on the above alleged omissions and disputed facts identified by the Ms. Managan as requiring a trial in her action:

a. The Defendants filed evidence of a $20,000 certified cheque provided by 216’s lawyer to the landlord’s lawyer in fulfilment of 237’s security deposit as agreed. Until argument on the motion, the Ms. Manangan had not questioned the Defendants regarding the authenticity of the documentation nor sought to cross-examine the Defendants’ deponent. I therefore find that Ms. Manangan’s misrepresentation allegation is without merit. The evidence supports a finding that the Defendants paid the $20,000 and are therefore entitled to the charge in that amount granted by Ms. Manangan. b. I am not persuaded that the court is required to review the lease agreements to determine the present motions before me. If that documentation were necessary, however, I note that Ms. Managan herself filed a letter from the Landlord’s counsel enclosing the lease agreements. Ms. Managan herself chose to file the letter but did not file the referenced lease attachments. During his submissions, Ms. Managan’s counsel did not argue that Ms. Managan did not possess the leases, rather that the onus was on the Defendants to file them with the court on these motions. On this point I find that the Plaintiff cannot rely on her own failure to file materials in her possession which she claims are necessary to demonstrate a “genuine issue for trial” as a basis for resisting summary judgment. As stated earlier, a party resisting summary judgment must put her “best foot forward” or risk losing. c. Ms. Manangan counsel argued that the Defendants withheld further bank statements in their possession which may show adjustment amounts owing to 237 from back in 2013 and/or 2014. I give no effect to his argument for two main reasons: Ms. Manangan’s counsel conceded he was not certain that his client had ever asked for the further statements, and the Defendants’ evidence confirmed payment by 216 to the purchaser, 237, of the adjustment amounts that had been requested by the purchaser during that time period. Accordingly, the evidence does not establish an issue for trial on this basis. d. 216 and its principals do not dispute that in August 2014, when Ms. Manangan went into default, they refused to give her more time to refinance. I agree with the Defendants’ position, supported by case law, that as a mortgagee, 216 was under no legal obligation to postpone or weaken the mortgage terms without consideration. Its refusal to postpone enforcement cannot therefore constitute an actionable wrong or genuine issue for trial.

[26] As referenced earlier, when resisting summary judgment, a party must put its best foot forward. On this motion, the court is entitled to assume that Ms. Manangan’s record contains all the evidence that she would present at trial.

[27] I have considered Ms. Manangan’s submissions and evidence. For the reasons above, I find that she has failed to meet her onus to prove the existence of a genuine issue requiring a trial.

[28] The Defendants’ motion for summary judgment on the Plaintiff’s claim is therefore granted.

[29] I note that the Defendants also argue that the Plaintiff, who failed despite notice to amend her claim to add her company, 237, as a Plaintiff, lacks standing in any event to advance breach of contract allegations in her own name. I accept this argument as accurate with respect to the breach of contract allegations in the Main Action; it is not necessary to consider the applicability of that argument to the intentional tort allegations, as I have found them to be without merit.

[30] In view of the conclusion reached and the dismissal of Ms. Manangan’s claim, it is not necessary for the court to make findings Defendant’s arguments relating to the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

No “Genuine issue for Trial” in Counterclaim

[31] The record confirms that the Plaintiffs by Counterclaim were granted three mortgages by the Plaintiff and that she defaulted on all of them. The Plaintiff, Defendant by Counterclaim, does not dispute that default.

[32] With respect to the Ms. Manangan’s contention that one of the $20,000 mortgage amounts was improper, I have addressed and dismissed that argument above. Having done so, the evidence before me supports granting summary judgment on the Counterclaim in the full amount of the mortgages plus interest calculated per the terms of each of the three charge instruments.

[33] The only aspect of the relief sought by 216 on its Counterclaim that the court cannot grant in the precise form requested, is directing payout of the Sale Proceeds in the Hamilton Registry to 216. In submissions, Defendants’ counsel Mr. Sidhu agreed that notice must be given to another of Ms. Managan’s creditors that was named in the Hamilton proceeding, before disbursal of the Sale Proceeds can be ordered.

Conclusion

[34] Counsel for 216 calculated the amount owing under the three mortgages, plus interest, to be $184,679.54 as of April 7, 2022. Mr. Jain for the Plaintiff did not dispute Mr. Sidhu’s calculation, in which Mr. Sidhu was content to calculate the balance owing using only a 5% interest rate (rather than 5.5%) with respect to the $115,000 mortgage.

[35] In granting judgment on the Counterclaim, I therefore fix the total amount owing by Ms. Manangan on the mortgages as of April 7, 2022, in the amount of $184,679.54. The draft order for judgment breaks the calculation into three parts to permit updating of calculation of interest owing to the date payment is made.

[36] Summary judgment granted accordingly.

Order

[37] Plaintiff’s motion for disbursal of Sale Proceeds dismissed with costs.

[38] Defendants’ summary judgment motion granted; Plaintiff’s action is dismissed with costs.

[39] Summary judgment motion by Plaintiff by Counterclaim granted with costs. Judgment on the Counterclaim hereby granted in favour of 216 against the Defendant by Counterclaim, Mennie Manangan, in the amount of $184,679.54, with costs.

Costs

[40] The Defendants/Plaintiff by Counterclaim were fully successful in obtaining summary judgment to dismiss Ms. Manangan’s action and motion, and in obtaining summary judgment on the Counterclaim.

[41] 216 seeks, and is entitled to its costs of prosecuting the Counterclaim, defending the main action, including the costs of the appearance to argue the motions on April 6, 2022.

[42] Rule 57.01 of the Rules of Civil Procedure sets out the factors that the court may consider when determining costs. Those relevant factors include:

a) The result in the proceeding; b) The experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer; c) The amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed; d) The amount claimed and the amount recovered in the proceeding; e) The complexity of the proceeding; f) The importance of the issues; g) The conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding.

[43] Modern costs rules are designed to foster three fundamental purposes: (1) To partially indemnify successful litigants for the cost of litigation; (2) To encourage settlement; and (3) To discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 46 O.R. (3d) 330 (C.A.), at para. 22.

[44] Costs awards, at the end of the day, should reflect “what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties”: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291, at para. 24, citing Zestra Engineering Ltd. v. Cloutier (2002), 21 C.C.E.L. (3d) 161 (C.A.), at para. 4.

Costs claimed

[45] At the conclusion of their arguments, the parties filed cost outlines and made submissions. A further day to file any relevant offers to settle was provided to the parties. No offers were filed.

[46] 216 seeks substantial indemnity fees of $11,448, disbursements of $650, plus HST, for a total of $13,665.89.

[47] Ms. Manangan opposes costs being awarded on a full indemnity basis, arguing that a partial indemnity scale is appropriate.

[48] In considering the appropriate scale I note the following factors:

1. I found the Plaintiff’s claim to be without merit.
2. Regarding delay, the Plaintiff took no steps to advance her action for over five years. It is a reasonable inference on all the evidence that her action was initiated and pursued as a roadblock to delay payment to 216 of the Sale Proceeds to which I have found it was entitled.
3. The Plaintiff pleaded, and failed to prove, intentional torts against the Defendants including fraud. The pleading of fraud, and failure to withdraw or take reasonable steps to substantiate such allegations against named individuals, is a further factor I consider which weighs in favour of full indemnity costs.

[49] In these circumstances, I conclude that it is appropriate to order a full indemnity scale of costs: 216 should be compensated on a full indemnity scale for having to defeat what was effectively a five-year filibuster action by Ms. Manangan before they could enforce their mortgages.

[50] In reaching this conclusion regarding scale of costs, I have not relied on any term of the mortgages requiring full indemnity for costs of enforcement. I declined to do so despite Mr. Sidhu’s submissions, because the wording in the mortgage document required Ms. Manangan to acknowledge receipt of charge terms provided to her “if any”. The charge document itself contained no reference to the scale of costs applicable in the event of enforcement proceedings being necessary. The record filed on the counterclaim contained no evidence as to whether any charge terms were provided to Ms. Manangan at the time of executing the charge documents.

[51] Having determined scale of costs, I must now consider the reasonableness of the costs claimed. I have reviewed the Defendants’ bill of costs. It is reasonable as to hourly rates, hours claimed, and disbursements.

[52] I have considered the above factors in the motions before me, and applied the relevant cost principles in the case law summarized above. I note further that by moving for summary judgment, 216 obtained judgment on both the claim and counterclaim by a process that was expedient and proportionate.

[53] By proceeding via summary judgment, the 216 and its principals avoided the further delay and expense of a trial, reduced the overall legal cost of resolving both the claim and claim and counterclaim for all parties, and consumed fewer judicial resources.

[54] Costs are therefore fixed in the amount of $13,665.89. This is a reasonable amount of costs given the amounts in issue. I find further that it is proportionate to what Ms. Manangan could have expected to pay, given that her own counsel’s cost outline, which described work less extensive than that performed by the successful parties, totalled $9,881.50 at a comparable full indemnity rate.

[55] Costs of $13,665.89 are ordered to be paid by Mennie Manangan to 2166729 Ontario Inc. forthwith.

[56] Draft order granting judgment, as amended by the Court, signed and to issue.

Justice McSweeney

Date: April 20, 2022