COURT FILE NO.: CV-20-00001957-0000
DATE: 2022 08 23
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: The Bank of Nova Scotia Plaintiff (Defendant by Counterclaim)
And
Sergio A. Grillone as known as Sergio Grillone operating as Grillone Law Firm Defendant (Plaintiff by Counterclaim)
BEFORE: Bloom, J.
COUNSEL: Randy Schliemann, counsel for the Plaintiff, the Moving Party
Sergio Grillone, self-represented, the Responding Party
HEARD: August 17, 2022
E N D O R S E M E N T
I. INTRODUCTION
[1] The Plaintiff moves for summary judgment for $340,859.77 allegedly owed to it on a line of credit, for an order that the Defendant deliver to the Plaintiff possession of all assets of the Grillone law firm, and for an order dismissing the Defendant’s counterclaim.
II. UNDISPUTED FACTS
[2] Under a credit line agreement dated January 20, 2015, the Bank granted the Defendant a line of credit payable on demand in the amount of $500,000 together with interest at the Bank’s prime rate of interest in effect from time to time plus 0.5% per annum. As security the Defendant entered a general security agreement granting the Bank a security interest in all of his assets and entitling the Bank to immediate possession of them on default on the line of credit.
[3] When the Defendant defaulted on his obligations under the line of credit, the Bank in August of 2019 made demand on him for the balance due and sought to enforce the security.
[4] On May 27, 2020 the Bank issued a statement of claim for the balance due on the line of credit and seeking to enforce the security.
[5] The wife of the Defendant had guaranteed the loan, and had provided as further security to the Bank a collateral charge on a residential property.
[6] On approximately July 10, 2020 the collateral charge was discharged as the Defendant’s wife sold the residential property and delivered payout funds of $190,352.77 to the Bank pursuant to her guarantee.
[7] The Defendant delivered a statement of defense and counterclaim dated July 15, 2020. In it he claims an order for payment to him by the Bank of money paid to it by his wife pursuant to the guarantee on the basis that those funds were not due under the guarantee
III. ARGUMENTS OF THE PARTIES
A. Arguments of the Defendant
[8] The Defendant makes two arguments, each of which he submits raise a genuine issue requiring a trial. First, he argues that the Plaintiff’s claim in the statement of claim is pursuant to the line of credit, but that the money he owes the Bank is under a different loan. Second, he argues that the Bank breached its contractual obligations to his wife in taking payment pursuant to the guarantee, since he owed nothing under the line of credit subject to the guarantee; and that, therefore, the Bank has caused him damage in the amount his wife paid to the Bank, since he is obligated to repay her that money. He seeks to recover that amount under the counterclaim.
B. Arguments of the Plaintiff
[9] The Plaintiff submits that no genuine issue requiring a trial arises regarding either issue raised by the Defendant.
[10] First, the Plaintiff argues that the evidence on the motion establishes that there was only one loan; that it was under the line of credit; and that $340,859.77 is owed under it; and that by way of internal bookkeeping entries of the Bank on or about September 11, 2019 the credit line was converted to a non-accrual account to ensure that the Defendant could not borrow any more money under the line of credit because he was in default.
[11] Second, the Plaintiff argues that on the evidence adduced on the motion there is no basis in law under which the Defendant can claim against the Bank for breach of its contractual relationship with the guarantor.
IV. GOVERNING PRINCIPLES
[12] Rule 20.04 (2), (2.1), and (2.2) provide as follows:
20.04
(2) The court shall grant summary judgment if,
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or
(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment. O. Reg. 284/01, s. 6; O. Reg. 438/08, s. 13 (2).
Powers
(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. O. Reg. 438/08, s. 13 (3).
Oral Evidence (Mini-Trial)
(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. O. Reg. 438/08, s. 13 (3).
[13] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at para. 66 Justice Karakatsanis for the Court explained the use of those provisions:
[66] On a 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] In a leading textbook on civil procedure, Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 4th ed (Toronto, Ontario: LexisNexis Canada Inc., 2020) at para. 6.223 the learned authors set out the following principles relative to a summary judgment motion:
The court is entitled to assume that the parties have respectively advanced their best case and that the record contains all the evidence that the parties respectively will present at trial. The onus is on the moving party to show that there is no genuine issue requiring a trial, but the responding party must present its best case or risk losing.
V. ANALYSIS
[15] I now intend to apply the governing principles set out above to the evidence before me.
A. There Was Only One Loan
[16] I find that, based on the evidence of Zamena Baksh, including exhibits tendered in her affidavit evidence and cross-examination, the debt owed by the Defendant pursuant to the line of credit was the same one as the one subject of the non-accrual account, and this debt was, therefore, the one subject of the statement of claim.
[17] Ms. Baksh had been a senior litigation officer with the Bank for about 12 years. In that role she worked with lawyers representing the Bank in litigation seeking to collect debts owed to the Bank by clients of the Bank.
[18] In her affidavit sworn February 16, 2021, she testified that, since the loan to the Defendant under the line of credit was in default and had not been paid under demands for payment made, it was converted on approximately September 11, 2019 to a non-accrual account to ensure that the Defendant could not borrow any more money under the line of credit in view of his default.
[19] She explicitly denied in the affidavit that the conversion of the account created a new loan. She explained that the conversion was an internal banking designation to ensure no further amounts could be withdrawn on the line of credit; and that all terms under the line of credit continued to apply to the debt.
[20] The bookkeeping entries of the Bank addressed by Ms. Baksh in her evidence are not clear without her explanation, but are consistent with that explanation. Moreover, her testimony was not weakened in cross-examination.
[21] The Defendant submitted that words in the bookkeeping records relating to the loan as converted, specifically “non revolving limit #01 renews 2020 July 31”, show that the loan recorded in the non-accrual account was a new one with different terms. However, he never put that language to Ms. Baksh in cross-examination; nor was there any evidence that it created a new loan or any evidence that on or after July 31, 2020 any change occurred in the status or terms of the debt owed by the Defendant.
[22] In my view there is no genuine issue requiring a trial with respect to the issue of the debt claimed by the Bank in the statement of claim. The amount of that debt including interest is $340,859.77.
B. The Defendant Has No Standing to Raise a Claim of Breach of a Contract Between the Creditor and the Guarantor
[23] The Defendant could demonstrate no basis in the record for his having standing to claim against the Bank for breach of its contractual relationship with the guarantor. While the Defendant argued that such a basis could be an assignment by the guarantor to him of a right of action against the Bank for breach of its contractual relationship with her, he conceded that there was no evidence in the record of such an assignment.
[24] Accordingly, I find that there is no genuine issue requiring a trial with respect to the counterclaim.
C. Order
[25] For the reasons set out above I grant the following relief to the Plaintiff on the motion for summary judgment: (i) judgment as against the Defendant for 340,859.77; (ii) an order that the Defendant forthwith deliver to the Bank of Nova Scotia possession of any and all assets of Sergio A. Grillone also known as Sergio Grillone operating as Grillone Law Firm including, without limitation, all personal property, accounts receivable, inventory, equipment, goodwill and intangibles, wherever located; (iii) an order dismissing the counterclaim; and (iv) post judgment interest of 3% on the judgment amount set out in clause (i).
VI. COSTS
[26] I received on the hearing of the motion submissions from the parties as to costs.
[27] The Defendant argued that the Plaintiff should receive no costs or modest costs if successful on the motion, because it failed to deliver an affidavit of documents.
[28] The Plaintiff sought full indemnity costs if it was successful, on the basis that the contractual relationship between the parties calls for full indemnity costs in the event of a proceeding such as the one at bar. The Plaintiff argues that such an agreement should be decisive in my exercise of discretion on the costs issue. In that regard the Plaintiff relies on Royal Bank of Canada v. Edna Granite & Marble Inc., [2017] O.J. No. 2791 (Ont. Sup.Ct.).
[29] I do not have an evidentiary basis to decide whether the Plaintiff was in default in providing its affidavit of documents. Moreover, the Defendant does not dispute that his contractual relationship with the Bank calls for his paying full indemnity costs if the Bank is successful in the case before me.
[30] I see no reason to deviate from that agreement in my exercise of my discretion with respect to costs. Accordingly, I award the Bank of Nova Scotia full indemnity costs of $95,580.80 payable within 30 days with post judgment interest at the rate of 3%.
Bloom, J.
Released: August 23, 2022
COURT FILE NO.: CV-20-00001957-0000
DATE: 2022 08 23
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: The Bank of Nova Scotia Plaintiff (Defendant by Counterclaim)
And
Sergio A. Grillone as known as Sergio Grillone operating as Grillone Law Firm Defendant (Plaintiff by Counterclaim)
BEFORE: Bloom, J.
COUNSEL: Randy Schliemann, counsel for the Plaintiff, the Moving Party
Sergio Grillone, self-represented, the Responding Party
ENDORSEMENT
Bloom, J.
Released: August 23, 2022