COURT FILE NO.: CV-20-00003137
DATE: 20220930
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Kathryn Greenspan
Plaintiff
– and –
Shaindel Goldman, Satwant Singh Khosla and Scott Mervyn Cook
Defendants
Jason Bogle, for the Plaintiff
Darryl Singer and Nadia Condotta, for the Defendant Shaindel Goldman
James R.G. Cook and Eli Bordman, for the Defendant Satwant Singh Khosla
Michael R. Kestenberg, for the Defendant Scott Mervyn Cook
HEARD: May 19, 2022
REASONS FOR DECISION
DI LUCA J.:
[1] This action arises out of series of mortgage investments made by the plaintiff, Ms. Greenspan. In each of the investments, the borrower defaulted on the loan and Ms. Greenspan suffered a loss. Ms. Greenspan has commenced two other actions relating to these mortgage investments. In this action, she now seeks damages against a law office clerk and two lawyers who were involved in the deals.
[2] The defendants each move for summary judgment. The plaintiff resists these motions and argues that there exists a genuine issue requiring a trial in relation to each defendant.[^1]
[3] For the reasons that follow, I grant summary judgment to the defendants and dismiss the claims against them.
Overview of the Parties
[4] The plaintiff, Ms. Greenspan, is an experienced private lender who was involved in a number of transactions involving the defendants and others. Given her high net worth, she qualified as a “designated class of lenders” as defined in the regulations issued pursuant to the Mortgage Brokerages, Lender and Administrators Act.
[5] The defendant, Shaindel Goldman, was a clerk in the law office of her father, Jeffrey Warren Goldman. Ms. Goldman referred Ms. Greenspan to Godfrey (Tony) Clarke, a licensed mortgage broker who worked for Mortgage Alliance Company of Canada. Mr. Clarke arranged the deals that are the subject of this action, though he is not named as a defendant in this action.
[6] Ms. Goldman met Ms. Greenspan at her father’s law office. At the time, Ms. Goldman was a mortgage agent licensed through the Financial Services Commission of Ontario. However, she did not act as a mortgage agent on the subject transactions.
[7] The defendant, Scott Mervyn Cook, is a lawyer who represented the plaintiff in a mortgage transaction that occurred in December 2012. Ms. Greenspan advanced $450,000 and obtained a mortgage on a property in Whitefish, Ontario (“the Whitefish Property”). The borrower was Robert Woods Construction (2009) Ltd. (“RWC”). Mr. Cook assisted in closing the transaction and following the completion of transaction, had no further dealings with Ms. Greenspan.
[8] In 2013, Mr. Cook represented RWC in its purchase of a property known as the Penage Hotel in Whitefish, Ontario. Ms. Greenspan advanced funds to RWC for this transaction and became the first mortgagee on title. She was represented by her own counsel at the time.
[9] Satwant Singh Khosla is a real estate lawyer. He represented Ms. Goldman on a 3rd mortgage transaction for the Penage Hotel which closed on August 12, 2013. While this was the first and only transaction on which Mr. Khosla acted, it was the third time Ms. Goldman had taken a third mortgage on the property, in addition to the first mortgage.
Overview of the Claim
[10] The statement of claim was issued on November 2, 2020, and is based on events which transpired in 2012 and 2013. The claim seeks $3,457,834.17 in special damages resulting from the defendants’ negligence, fraud and breach of contract. It also seeks $100,000 in general damages resulting from the defendants’ breach of contract, breach of trust, professional negligence, fraudulent misrepresentation, intentional infliction of mental suffering, unjust enrichment, simple motive conspiracy or unlawful conduct conspiracy and resulting economic loss. Lastly, the claim seeks $100,000 in punitive damages.
[11] Ms. Greenspan broadly claims that Ms. Goldman:
a. Engaged in simple motive conspiracy, or in the alternative, unlawful conduct conspiracy, with one or more of the defendants; and,
b. Engaged in fraud.
[12] More specifically, Ms. Greenspan alleges that Ms. Goldman targeted and exploited her because she was aware of her financial position prior to the subject transactions. Moreover, Ms. Greenspan also alleges that Ms. Goldman used a corporation under her control to conceal fraudulent transfers of monies to Mr. Clarke.
[13] Ms. Greenspan broadly claims that Mr. Cook and Mr. Khosla:
a. Negligently represented her in the impugned transactions;
b. Engaged in simple motive conspiracy, or in the alternative, unlawful conduct conspiracy, with one or more of the defendants; and,
c. Engaged in fraud.
[14] In relation to Mr. Cook specifically, Ms. Greenspan alleges:
a. He negligently represented Ms. Greenspan on two separate transactions, the Whitefish First Mortgage and the 2nd Mortgage on the Penage Hotel;
b. He failed to ensure that an appraisal was obtained on both the Whitefish Property and Penage Hotel before he released funds;
c. He failed to advise Ms. Greenspan of the sudden increase in value of the Penage Hotel;
d. He failed to warn Ms. Greenspan that the mortgage was not a first mortgage on the Penage Hotel;
e. He failed to warn Ms. Greenspan that the mortgage on the Penage Hotel was a construction rather than a conventional mortgage;
f. He failed to complete the Law Society of Ontario Forms 9D and 9E;
g. He failed to obtain title insurance for Ms. Greenspan with respect to the Penage Hotel; and,
h. He failed to obtain an inspection report from the mortgage broker, Tony Clarke, prior to advancing funds on the Penage Hotel.
[15] In relation to Mr. Khosla, whose only involvement is with the 3rd mortgage on the Penage Hotel, Ms. Greenspan alleges:
a. Khosla failed to obtain an appraisal of the Penage Hotel and/or failed to advise the plaintiff on the value of the hotel;
b. Khosla failed to advise the plaintiff of the terms and risks associated with the 3rd mortgage;
c. Khosla failed to follow the plaintiff’s instructions;
d. Khosla failed to obtain title insurance for the plaintiff; and,
e. Khosla failed to complete a Law Society of Ontario Form 9E.
[16] While the statement of claim was not filed until November 2, 2020 and relates to transactions that occurred back in 2012 and 2013, Ms. Greenspan asserts that some of her claims were not discoverable until either May 2019 or May 2020.
[17] In support of this assertion, Ms. Greenspan claims that she first learned certain key facts when she managed to obtain redacted excerpts of an investigative brief prepared by the Financial Services Commission of Ontario (“FSCO”) who, it appears, investigated Tony Clarke and Shaindel Goldman following a complaint by RWC in or around 2014. The redacted excerpts were obtained on May 4, 2019.
[18] In addition, Ms. Greenspan asserts that she first learned that Ms. Goldman worked for Mr. Cook in her capacity as law clerk on May 25, 2020, when she gleaned this fact from Ms. Goldman’s statement of defence filed in a related action commenced by RWC. Ms. Greenspan asserts that prior to this time, she believed that Ms. Goldman’s only involvement with Mr. Cook was in her capacity as a mortgage agent.
[19] It is important to note at the outset that Ms. Greenspan has opted to provide no direct evidence supporting these assertions. Instead, she relies on the affidavit sworn by her husband, Dr. Greenspan. While I will return to this issue later, Dr. Greenspan’s views of what the plaintiff believed or learned as a result of the FSCO report or Ms. Goldman’s statement of defence in another proceeding, are simply not evidence. They are hearsay and conjecture.
Related Claims and Litigation
[20] The plaintiff has commenced several actions stemming from her involvement in the subject mortgage transactions.
[21] On March 3, 2017, the plaintiff commenced an action (“the 2017 Action”) against Tony Clarke, Mortgage Alliance of Canada, Shaindel Goldman and others seeking damages for fraud, negligence, negligent misrepresentation and breach of fiduciary duty.[^2] One aspect of this action relates to the mortgages on the Penage Hotel and the conduct of Ms. Goldman in relation to those transactions.
[22] More specifically, the statement of claim alleges that Ms. Goldman and Mr. Clarke negligently and fraudulently misrepresented material aspects of the Penage Hotel mortgage transactions.
[23] Importantly, paragraph 11 of the claim asserts that RWC was involved in the “renovation and development” of the Penage Hotel, and further asserts that Mr. Clarke was to monitor and control the disbursement of the funds to “ensure they were properly being allocated towards construction costs in connection with the development of the Penage Hotel…”
[24] As well, paragraph 25(i) of the claim asserts that Mr. Clarke and Ms. Goldman were engaged in “improperly diverting funds from Greenspan’s advances.”
[25] In 2019, the plaintiff, her husband Dr. Greenspan and her mother Anna Cohen, commenced an action against Ms. Goldman, Jeffrey Goldman’s estate and Canada Wide Financial Inc. (“the 2019 Action”).[^3] This action seeks damages for negligence, fraud and breach of contract in relation to various mortgage transactions, including the mortgages on the Penage Hotel and the Whitefish Property.
[26] At paragraph 29 of this claim, the plaintiff asserts that Mr. Clarke, Ms. Goldman and Mr. Goldman “…through the course of their dealings with Dr. and Mrs. Greenspan, had failed to disclose all documentation, so that they may engage in unlawful remuneration that went undetected due to their lack of transparency.” Further, at paragraph 32 of the claim, the plaintiff asserts that “Mr. Clarke and Ms. Goldman, with the assistance of J. Goldman, misappropriated portions of Dr. and Mrs. Greenspan’s investment in the form of unlawful and unauthorized fees.”
[27] Paragraphs 140 and 141 of the claim assert that Mr. Goldman failed to advise the plaintiff that the mortgage on the Penage Hotel was a “high-risk construction mortgage” as opposed to a conventional mortgage.
[28] Lastly, paragraphs 165 to167 of the claim plead facts gleaned from the FSCO investigation report relating to Mr. Clarke and Ms. Goldman.
Brief Summary of Evidence
(a) The Whitefish Property
[29] In December 2012, Ms. Greenspan retained Mr. Cook to act on her behalf on a mortgage matter relating to the Whitefish Property located at 524 St. Pothier Road, Whitefish, Ontario. Mr. Cook was referred to Ms. Greenspan by Ms. Goldman.
[30] Ms. Goldman met Ms. Greenspan through her father’s law firm. Though she was licensed as a mortgage agent through FSCO, she did not act in that capacity in relation to the subject transaction.
[31] Prior to Mr. Cook’s retainer, Ms. Goldman had already provided a mortgage commitment to advance $450,000 to RWC in relation to the re-financing of the Whitefish Property. RWC was represented by separate counsel on the transaction.
[32] Mr. Cook prepared the mortgage documents and the transaction closed on December 6, 2012, when the funds were transferred and the mortgage was registered in first position on title.
[33] On February 27, 2013, Ms. Goldman advanced further funds to RWC in relation to the Whitefish Property. A charge of $115,000 was registered as a second mortgage on the property. Jeffrey Goldman acted for both the borrower and lender on this transaction. Mr. Cook was not involved in this transaction.
[34] On December 5, 2014, the house on the Whitefish Property burned down. In October 2015, Ms. Greenspan received $224,960.39 from insurance proceeds.
[35] In his evidence, Dr. Greenspan makes a number of factual admissions regarding the Whitefish Property. These include:
a. RWC ceased making mortgage payments on the Whitefish Property in 2014;
b. Ms. Greenspan began foreclosure proceedings regarding the Whitefish property in 2014;
c. Ms. Greenspan ultimately recovered her principal on the Whitefish Property. Her loss was limited to interest and costs;
d. Ms. Greenspan knew an appraisal was obtained before the advance but had not received it until after the advance. She relied on Mr. Clarke and Ms. Goldman to advise her on the value of the property.
(b) The Penage Hotel
[36] In 2011, Ms. Goldman referred Ms. Greenspan to Mr. Clarke for the purpose of seeking mortgage investments. Mr. Clarke eventually presented Ms. Greenspan with a deal regarding the purchase and renovation of the Penage Hotel in Whitefish, Ontario. Ms. Greenspan agreed to invest in a mortgage on the property.
[37] On or about February 25, 2013, Mr. Cook was retained by RWC with respect to its purchase of the Penage Hotel from Secure Store Sudbury Inc. for $790,000. Ms. Greenspan financed the purchase and took a first mortgage in the amount of $570,000. Ms. Greenspan was represented by Jeffrey Goldman on the transaction.
[38] On March 7, 2013, Ms. Greenspan advanced a further $270,000 to RWC. This advance was secured by a third mortgage on the Penage Hotel. Jeffrey Goldman acted as counsel for both the lender and borrower on this transaction.
[39] On June 6, 2013, the 1st mortgage was replaced by a 2nd mortgage in the amount of $420,000. Ms. Greenspan asserts that Mr. Cook represented both Ms. Greenspan and RWC on this transaction, though she has provided no direct evidence on this point. Mr. Cook denies this assertion and maintains that he only acted for her once in relation to the Whitefish Property. I will address this factual dispute later in these reasons.
[40] On August 12, 2013, the 2nd mortgage was replaced by a 3rd mortgage in the amount of $670,000. The defendant Mr. Khosla acted for Ms. Greenspan on this transaction. It was his only involvement in the matter and after he reported to Ms. Greenspan in writing, he had no further communication with her until this action was commenced seven years later.
[41] Ms. Goldman drafted three Mortgage Commitments for the Penage Hotel, based on instructions given by Mr. Clarke and Ms. Greenspan. Ms. Goldman asserts that she has no knowledge of any interest that Mr. Clarke may have had in the transactions with Ms. Greenspan.
[42] In his evidence on the motion, Dr. Greenspan makes a number of admissions in relation to the Penage Hotel:
a. RWC has not made mortgage payments on the Penage Hotel since 2015;
b. A receiver was appointed by Justice Healey for the Penage Hotel in 2015;
c. By March 2017, Ms. Greenspan knew that she had not received an appraisal on the property, though she had received an opinion of value in 2014;
d. By March 2017, Ms. Greenspan knew the lawyers involved in the mortgage transactions;
e. By March 2017, Ms. Greenspan knew it was appropriate to sue in order to protect her interests;
f. In March 2017, Ms. Greenspan sued the mortgage broker involved, Tony Clarke, and the defendant Ms. Goldman;
g. In the 2017 Action, Ms. Greenspan pleads that she was aware that the Penage Hotel was under construction and development at the time of her mortgage advance;
h. Dr. Greenspan never met nor spoke with Mr. Cook.
[43] RWC reported Mr. Clarke and Ms. Goldman to FSCO in or around 2014. FSCO commenced an investigation which was completed in 2016. Redacted excerpts of the investigative brief were obtained by Ms. Greenspan, who now asserts that the contents of these redacted excerpts revealed for the first time the basis for the claims advanced in this action. Again, and to be clear, while Ms. Greenspan asserts that the FSCO report provides the basis for discovering the claims now advanced, she has opted to provide no evidence herself on this issue.
The Law on Summary Judgment
[44] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that a court shall grant summary judgment where there is no genuine issue requiring a trial. In Hryniak v. Mauldin, 2014 SCC 7 at para. 49, the Supreme Court of Canada discussed the scope of the summary judgment power in Rule 20.04(2)(a) of the Rules of Civil Procedure:
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.
[45] The Court further directed judges considering summary judgment motions as follows at para. 66:
On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring a trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issuing 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 interests of justice. Their use will not be against the interests 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.
[46] Summary judgment is only appropriate if, based on the evidence presented on the motion, the judge can confidently make the required factual findings and apply the relevant legal principles so as to fairly resolve the dispute. Resort to the enhanced forensic tools of Rule 20.04 (2.1) and (2.2) is only appropriate where it leads to a fair process and a just determination of the matter; see Mason v. Perras Mongenais, 2018 ONCA 978, at para. 44.
[47] The modern approach to summary judgment motions requires that parties continue to put their “best foot forward”, see Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753 at para. 9. As Corbett J. notes in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 32, aff’d 2014 ONCA 878:
Summary judgment motions come in all shapes and sizes, and this is recognized in the Supreme Court of Canada’s emphasis on “proportionality” as a controlling principle for summary judgment motions. This principle does not mean that large, complicated cases must go to trial, while small, single issue cases should not. Nor does it mean that the “best foot forward” principle has been displaced; quite the reverse. If anything, this principle is even more important after Hryniak, because on an unsuccessful motion for summary judgment, the court will now rely on the record before it to decide what further steps will be necessary to bring the matter to a conclusion. To do this properly, the court will need to have the parties’ cases before it.
[48] On a similar note, Dunphy J. in 2313103 Ontario Inc. et al. v. JM Food Services Ltd. et al., 2015 ONSC 4029 at para. 40 explains as follows:
Of particular relevance to this case is “best foot forward” assumption. In bringing a motion for summary judgment the court is entitled to assume that both parties have put before the court all of the evidence they would intend to adduce at trial (even if not in the same form) that relates to the issues for decision on the motion. Ambush and surprise have no legitimate place in modern litigation, but this is particularly so in motions for summary judgment where the entire action or a substantial part of it may be disposed of in favour of one or the other party. Summary judgment is no place for a party to look to keep powder dry for another day and it is rather late in the process to sit down and ensure the issues are thoroughly understood.
[49] The court can also assume that the party responding to a summary judgment motion will present the evidence it intends to rely on at trial in order to prove that its claim or defence has a chance of success. In the vernacular, the responding party must “lead trump or risk losing”, see 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 1995 CanLII 1686 (ON CA), 21 O.R. (3d) 547 (C.A.) at p. 557, and Juneja v. Samra, 2016 ONSC 5502 at paras. 20-21.
[50] In assessing the evidence, the court may draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts, see Rule 20.02(1) of the Rules and see Parris v. Laidley, 2012 ONCA 755 at para. 2 and 2152222 Ontario Limited v. 2173435 Ontario Inc., 2016 ONSC 2978 at para. 41.
Limitations Act, 2002 and Discoverability
[51] Section 4 of the Limitations Act, 2002, directs that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discoverable. Section 5(1) of the Act sets out the following requirements for discoverability:
Discovery
5(1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).
[52] Section 5(1) requires consideration of when the plaintiff knew or reasonably ought to have known the four criteria listed in section 5(1)(a)(i) to (iv). The operative date will be the earlier of the dates on which the plaintiff actually knew or the date on a which a reasonable person with the abilities and in the circumstances of the plaintiff ought to have known, see Kumarasamy v. Western Life Assurance Company, 2021 ONCA 849 at para. 23. Section 5(2) of the Act creates a presumption that a person knew of a claim on the day the act or omission on which the claim is based occurred, unless the contrary is proven.
[53] A claim is discovered when a plaintiff has actual or constructive knowledge of material facts upon which a plausible inference of liability against the defendant can be drawn, see Grant Thornton LLP v. New Brunswick, 2021 SCC 31 at paras. 42-44. A plaintiff will have constructive knowledge when the evidence shows that the plaintiff ought to have discovered the material facts by exercising due diligence, see Longo v. MacLaren Art Centre, 2014 ONCA 526 at paras. 42-43 and Tender Choice Foods Inc. v. Versacold Logistics Canada Inc., 2013 ONSC 80 at para. 56, aff’d 2013 ONCA 474.
[54] In terms of knowledge, the plaintiff does not need to know the exact act or omission by the defendant that caused the loss in question. The plaintiff simply needs to have an evidentiary basis to believe that the defendant did an act or omission that caused a loss for which a court proceeding is appropriate. In other words, the plaintiff need only be aware of a “plausible inference of liability”, see Gordon Dunk Farms Limited v. HFH Inc., 2021 ONCA 681 at paras. 34 and 36.
[55] The discovery of a claim does not depend on the plaintiff knowing that the claim is likely to succeed or marshalling and assessing all the evidence in support of the claim, see Sosnowski v. MacEwen Petroleum Inc., 2019 ONCA 1005 at para. 19 and Dass v. Kay, 2021 ONCA 565 at paras. 43-44. The later discovery of facts which make a claim more likely to succeed does not re-set the limitations clock. That said, there may be circumstances where a plaintiff later learns of another act or omission that was not apparent from the circumstances of the loss and that gives rise to a new or different claim, see Gordon Dunk Farms at para. 37.
[56] In Shukster v. Young et al., 2012 ONSC 4807 at para. 19, Leach J. offered the following summary of the analytical approach where a limitation issue is raised on a summary judgment motion:
• Subsection 5(1)(a) contains a subjective test that focuses on the plaintiff’s actual knowledge of the types of facts enumerated under that provision. Evidence that the plaintiff had actual knowledge of such matters will trigger operation of the limitation period. However, a lack of such evidence and/or a denial of such actual knowledge will not suffice to prevent a finding that operation of the limitation period was triggered, if other provisions of section 5 indicate that such a finding is appropriate.
• In particular, subsection 5(1)(b) contains a second test that is objective, and requires the plaintiff’s knowledge to be assessed in relation to a standard asking when a reasonable person, with the plaintiff’s abilities and in the plaintiff’s circumstances, ought to have had knowledge of the matters enumerated in subsection 5(1)(b). This in turn usually leads to a consideration of the steps such a person would have taken to acquire such knowledge. In effect, the question becomes one of determining when the plaintiff, in the particular circumstances of the case, ought to have learned of such matters. One must ask why the plaintiff and his/her solicitor were unaware of such matters until some later point. The applicable standard is that of a “reasonably prudent person in pursuing the facts”.
• Moreover, subsection 5(2) goes further, and establishes a rebuttable presumption that the plaintiff did know of such matters on the day the underlying act or omission took place. The burden is on the plaintiff to rebut that presumption. In other words, once a defendant has pleaded a limitations defence, the evidentiary burden is on the plaintiff to prove that the claim was issued within the limitation period.
• Pursuant to Rule 20, a party moving for summary judgment retains the overall burden of showing that there is no genuine issue requiring trial. However, where a defendant moves for summary judgment in relation to a statutory limitation period, the evidentiary burden as to the discoverability issue and under Rule 20 effectively shifts to the responding party under section 5(2). In particular, the plaintiff must adduce evidence sufficient to demonstrate that there is a genuine issue requiring trial, concerning operation of the limitation period pursuant to subsections 5(1) and 5(2). In particular, a plaintiff seeking to defeat operation of the limitation period on such a motion has the onus to rebut the presumption in s.5(2), or at least demonstrate that there is a genuine issue requiring a trial as to whether that presumption is rebutted.
• Such determinations are fact driven, and must be decided based on the particular circumstances of each case.
Analysis and Findings
[57] In what follows, I will address each defendant’s request for summary judgement individually. However, I will start by addressing Ms. Greenspan’s decision to rely only on the evidence of her husband, Dr. Greenspan, and not file her own affidavit on which she would have been cross-examined.
[58] There is no issue that Ms. Greenspan is the best person to provide direct evidence of her claim and more particularly, her involvement with the defendants. There is also no issue that Ms. Greenspan is an experienced private investor who has advanced private mortgages on many occasions. Nonetheless, in this action, Ms. Greenspan asserts that the various defendants misled her, negligently misrepresented her and engaged in conspiracy and fraud against her.
[59] Despite her assertions and despite the jurisprudential requirement to “put one’s best foot forward” on a summary judgment motion, Ms. Greenspan has made the decision to rely only on her husband’s evidence and shield herself from cross-examination. Moreover, she has offered no reason why she could not have submitted an affidavit and attended for cross-examination. In the absence of such evidence, the only inference is that the decision was tactical.
[60] In addition, Ms. Greenspan asserts that the claims advanced in this action were only discovered following her receipt of the redacted excerpts of the FSCO investigative brief. Despite this assertion, she has provided no evidence as to her subjective state of mind on the issue of discoverability.
[61] This is a tactic that is unwise. It is also a tactic that warrants an adverse inference, see Mazza v. Ornge Corporate Services Inc., supra, at para. 9.
[62] I turn next to the use that ought to be made of the redacted excerpts of the FSCO investigative brief. The plaintiff purports to use the “findings” allegedly made by FSCO as evidence in these proceedings, both in terms of addressing the discoverability issue but also as proof of the substantive allegations against the defendants.
[63] In terms of discoverability, Dr. Greenspan asserts in his affidavit that the following was learned from the FSCO Investigations Records:
a. That the exorbitant lender referral fees that were charged were being laundered through Ms. Goldman’s company and Ms. Goldman later split these fees with Mr. Clarke;
b. Ms. Goldman’s relationship with Mr. Cook and her role in involving Mr. Cook and in participating in this scheme of misrepresentations and fraudulent transactions; and,
c. That Ms. Goldman was in a relationship with Mr. Clarke and had a clear conflict of interest.
[64] In this regard, I note that Dr. Greenspan’s evidence sheds no light on the plaintiff’s actual knowledge, the timing of her knowledge or the steps she took to discover certain facts. While the investigative brief may have informed what was in Ms. Greenspan’s mind at a certain point in time, she has offered no direct evidence herself on this issue.
[65] In addition, to the extent that the plaintiff seeks to use the FSCO investigative brief as substantive evidence on this motion, it is important to note that a redacted excerpt from an investigative brief offers no proof of the facts contained therein. I say this for several reasons.
[66] First, the brief appears to be mainly hearsay, though it contains some admissions by Ms. Goldman which are admissible against her.
[67] Second, the brief is incomplete and the portion produced in the record is comprised of redacted excerpts. It is unclear who the source of the information contained in the records is. There are also significant gaps in the narrative and context as a result of the redactions.
[68] Third, the records do not amount to “findings” that might give rise to res judicata or related estoppel issues. They are simply excerpts taken from an investigative brief. Indeed, the portion of records tendered is entitled “Complaint Overview” and appears to be simply a summary of the complaint and the information obtained during FSCO’s investigation.
[69] Lastly, the records make no mention of Mr. Cook or Mr. Khosla and contain no admissible evidence against either of them in any event.
(a) Scott Mervyn Cook
[70] The plaintiff’s complaints regarding Mr. Cook centre on his alleged involvement in two transactions: (a) the mortgage on the Whitefish Property and (b) the second 3rd mortgage in the Penage Hotel.
[71] There is no issue that Mr. Cook acted for Ms. Greenspan in relation to the mortgage on the Whitefish Property.
[72] The mortgage on the Whitefish Property closed in December 2012. The house on the Whitefish Property burned down on December 5, 2014. RWC stopped making payments on the mortgage in 2014, and Ms. Greenspan commenced foreclosure proceedings at that time. On October 5, 2015, Ms. Greenspan received a payment of $224,960.39 from insurance proceeds. As of that date, Ms. Greenspan knew that she had suffered a loss under the mortgage.
[73] I am readily satisfied that as of 2014, and in any event no later than October 5, 2015, Ms. Greenspan knew of or could reasonably have discovered the material facts on which a plausible inference of liability on the part of Mr. Cook could be based, and furthermore would have known that a lawsuit was appropriate. A trial is not required to determine this issue.
[74] There is no evidence from Ms. Greenspan rebutting the presumption of knowledge. Indeed, there is no evidence explaining why Ms. Greenspan did not or could not have reasonably discovered a claim against Mr. Cook until two years before the claim was commenced in November 2020.
[75] In terms of the substantive merits of the claim against Mr. Cook in relation to the Whitefish Property, the plaintiff has opted not to tender expert evidence on the standard of care. In my view, this is fatal to the claim. This is not an instance where the issue to be determined is either non-technical or within the knowledge of an ordinary person, nor is it an instance where the conduct of Mr. Cook is so egregious as to render an expert opinion unnecessary, see Krawchuk v. Scherbak, 2011 ONCA 352 at paras. 132-135, Lindsay v. Aird & Berlis LLP, 2018 ONSC 7424 at para. 46 and McPeake v. Cadesky & Associates et al., 2018 ONCA 554 at para. 11.
[76] In terms of the specific claims against Mr. Cook in relation to his handling of the mortgage on the Whitefish Property, I note that Dr. Greenspan agreed in his evidence that he and Ms. Greenspan knew that an appraisal had been obtained but not provided at the time of the advance, and they relied on Tony Clarke to advise of the value of the property.
[77] In terms of the failure to file Form 9D and 9E in accordance with the Law Society of Ontario by-laws, it is not at all clear that Mr. Cook was required to do so in this case in view of the fact that Mr. Clarke, a licensed mortgage broker, was involved in the transactions. More importantly, even assuming that these forms should have been filed by Mr. Cook, there is no evidence suggesting that he fell below the required standard of care by failing to do so or that the failure caused any of the claimed damages.
[78] Based on the record before me, a trial is not required to determine these issues. There is simply no evidence that Mr. Cook acted negligently in relation to the Whitefish Property mortgage.
[79] In terms of the Penage Hotel, the evidence establishes that RWC stopped making payments on the mortgages in 2015, and a receiver was appointed by the court. As of March 2017, the date on which Ms. Greenspan commenced her first action in relation to these transactions, Ms. Greenspan was aware that she had not received an appraisal in relation to the value of the Penage Hotel property, she knew who the lawyers involved in the transactions were, and also knew that it was appropriate to commence an action to protect her interests. Indeed, she commenced an action against Mr. Clarke and Ms. Goldman at this time.
[80] Again, I readily find that Ms. Greenspan either knew or reasonably ought to have known the material facts upon which a plausible theory of liability on the part of Mr. Cook could be drawn in relation to the Penage Hotel mortgages. Ms. Greenspan has tendered no evidence suggesting otherwise.
[81] In addition, Mr. Cook’s evidence is that he was never retained by Ms. Greenspan in relation to any of the Penage Hotel mortgage deals and therefore owed her no duty of care. Ms. Greenspan asserts that Mr. Cook did act as her counsel in relation to the 2nd mortgage. On this issue, I note that Ms. Greenspan gave no direct evidence that Mr. Cook was her counsel on the transaction. This fact would have been uniquely within her knowledge. I draw a strong adverse inference from her failure to provide direct evidence on this issue.
[82] In terms of the balance of the evidence on this issue, I place no weight on Dr. Greenspan’s bald assertion that Mr. Cook acted for Ms. Greenspan on the subject transaction. There is no suggestion that this is an admission made by Mr. Cook to Dr. Greenspan, and as such it is either hearsay or conjecture.
[83] As well, I note there is a conspicuous absence of any documentary material that might support an inference that Mr. Cook acted for Ms. Greenspan on the transaction. In this regard, there is no reporting letter, retainer agreement, or copy of a cheque or other proof that funds went to Mr. Cook for disbursement. While the plaintiff points to the mortgage charge for the transaction which was signed and submitted by Mr. Cook as proof that he acted for Ms. Greenspan on the mortgage, I note that the charge actually lists him as counsel for the “Chargor.” Ms. Greenspan was the “Chargee” on the transaction.[^4]
[84] Ultimately, there is no admissible evidence before the court supporting a finding that Mr. Cook acted for Ms. Greenspan in relation to any of the Penage Hotel mortgages. A trial is not required to determine whether he owed her a duty of care that he breached. She was never his client on the transaction. He owed her no duty of care.
[85] Lastly, I turn to the claim that Mr. Cook was involved in a conspiracy and/or fraud against Ms. Greenspan along with his co-defendants. On this issue, I agree with the submissions of counsel for Mr. Cook. Ms. Greenspan has made bald allegations of conspiracy and fraud and has tendered no evidence in support of the elements of each claim. In particular, there is no direct or circumstantial evidence supporting a finding that Mr. Cook entered into an agreement with his co-defendants to injure the plaintiff and cause her damages. Apart from the mere fact that Mr. Cook was involved in certain transactions along with the other defendants, there is simply no evidence of collusion. In terms of the allegation of fraud, there is no direct or circumstantial evidence that Mr. Cook made any false representations or knew of any false representations being made to Ms. Greenspan. These claims are meritless and unsupported by evidence.
(b) Satwant Singh Khosla
[86] Mr. Khosla’s only involvement in this matter was in relation to a 3rd mortgage on the Penage Hotel which was completed on August 12, 2013. At the time he acted for Ms. Greenspan on the matter, she had already taken the first mortgage on the party as well as the 1st and 2nd mortgages.
[87] As indicated, this action was commenced on November 3, 2020. In view of the suspension of limitation periods for six months due to COVID-19, Mr. Khosla submits that the applicable cut off date for expiry of the limitation period is May 4, 2018. Mr. Khosla argues that well before May 4, 2018, Ms. Greenspan had or reasonably ought to have discovered the material facts upon which to base a plausible inference of liability on his part, and that she also knew or ought to have known that it was legally appropriate to commence an action against him. In support of this argument, Mr. Khosla points to the 2017 Action and notes that the nature of his involvement would have been obvious to Ms. Greenspan at the time that action was commenced.
[88] More particularly, Mr. Khosla submits that by no later than March 3, 2017, which is the date when the 2017 Action was commenced, Ms. Greenspan knew or reasonably ought to have known the following facts:
a. Khosla was the plaintiff’s lawyer for the 3rd mortgage transaction on the Penage Hotel for an advance of $250,000 registered on August 12, 2013;
b. The plaintiff received Khosla’s reporting letter dated August 22, 2013, which enclosed a copy of the signed mortgage commitment for the 3rd mortgage;
c. The plaintiff did not communicate with, obtain advice from, or otherwise deal with Khosla regarding the 3rd mortgage after August 2013;
d. The amount advanced by the plaintiff and secured on the Penage Hotel under her various mortgages was well over $1.2 million;
e. The mortgagor RWC had represented that the Penage Hotel was worth $2.5 million as confirmed by an appraisal that was supposedly in the possession of the mortgage broker, Tony Clarke, and Ms. Goldman;
f. The plaintiff relied on the broker Tony Clarke to tell her what the value of the Penage Hotel was and/or Jeffery Goldman to verify the value of the Penage Hotel via certified appraisal;
g. Neither the plaintiff nor her husband ever went to look at the Penage Hotel;
h. On May 5, 2014, an appraisal of the Penage Hotel by Gerald A. Rouleau (“Rouleau”) assessed the Penage Hotel’s value at being approximately $800,000;
i. In April 2014, the plaintiff’s husband retained another lawyer (Miles Waxman) to act as their legal counsel regarding the Penage Hotel;
j. On or about February 2015, the plaintiff’s litigation lawyer (Ian Klaiman) was unable to obtain a potential forbearance agreement with the Penage Hotel’s owner, and the plaintiff made arrangements with the second mortgagee, Secure Store Sudbury Inc. (“Secure Store”), to arrange for the completion of the Penage Hotel;
k. In July 2015, legal proceedings were commenced by the plaintiff and Secure Store to realize on their mortgage security following the default of RWC under the mortgages (including the 3rd mortgage registered by Mr. Khosla);
l. By August 2015, RWC was in default of its obligations under the plaintiff’s mortgages;
m. On August 27, 2015, by Order of Healey J., BDO Canada was appointed receiver for the purposes of taking control and selling the Penage Hotel;
n. On October 30, 2015, an appraisal of the Penage Hotel by Rouleau assessed the Penage Hotel’s value at being approximately $700,000 due to approximately $200,000 in damage caused by RWC;
o. On or about December 15, 2015, an appraisal of the Penage Hotel by Rouleau assessed the hotel’s value at being approximately $900,000;
p. On December 16, 2015, Duncan C. Bell of Charles Bell Real Estate Appraisals Ltd. (“Bell Appraisals”) sent a letter enclosing an appraisal report to BDO Canada with the understanding that the real estate appraisal would be shared with the plaintiff;
q. The appraisal report included an appraisal of the Penage Hotel by Bell Appraisals dated April 9, 2014, assessing the Penage Hotel’s value as being approximately $673,000 and a further letter of update for the hotel confirmed the approximate value of the hotel was $673,000 on October 14, 2015;
r. The plaintiff’s husband confirmed that the Bell Appraisals were provided to the plaintiff before 2017;
s. On or about January 24, 2016, the plaintiff was advised by BDO Canada that the Penage Hotel did not have a convenience store and should not be referred to as “a hotel”;
t. On or about March 9, 2016, an investigation by the FSCO initiated by RWC was concluded;
u. In May 2016, BDO Canada Limited was listed as a receiver on the title of the Penage Hotel;
v. As of March 3, 2017, the plaintiff had not received any payments from RWC under the mortgages, including the one registered by Khosla. The amount outstanding on the plaintiff’s first mortgage was over $1.1 million, and she had not received any payments under her 3rd mortgage principal of $670,000;
w. On March 3, 2017, the plaintiff was represented by litigation counsel who commenced an action against numerous defendants - including the mortgage broker Tony Clarke and the co-defendant Ms. Goldman - seeking damages of more than $2.6 million for fraud, negligence, negligent misrepresentation and breach of fiduciary duty, relating in part to the potential loss of funds under the 3rd mortgage registered by Mr. Khosla;
x. One of the specific allegations against Mr. Clarke and Ms. Goldman in the 2017 Action, was that they had failed to present the plaintiff with any documentary evidence as to the value of the Penage Hotel and RWC’s ability to meet mortgage payments, in addition to other allegations of negligence;
y. The plaintiff further alleged in the 2017 Action that she suffered damages including the loss of her mortgage advances, loss of profits, loss of opportunity, and various out-of-pocket expenses as a result of the defendants’ conduct;
z. There is no reason or explanation from the plaintiff as to why Khosla could not have been included as a defendant in the 2017 Action had she chosen to do so;
aa. On or about June 16, 2017, the plaintiff and Secure Store were required to provide a further $360,000 to complete the renovations of the Penage Hotel;
bb. In September 2017, the plaintiff’s husband made a complaint to LawPRO about the deceased lawyer, Jeffrey Goldman; and,
cc. In November 2017, or “shortly thereafter,” the plaintiff became suspicious that no appraisal had been conducted by Mr. Clarke, Mr. Goldman or Ms. Goldman.
[89] The facts just reviewed are supported in the evidence before the court and in the pleadings filed by the plaintiff on the various actions. Taken together, I am satisfied that they manifestly establish that the plaintiff either did or reasonably ought to have known of the material facts that plausibly support an inference of liability against Mr. Khosla no later than March 2017, and likely much earlier.
[90] Furthermore, the FSCO Investigative Brief does not act to re-set the limitations clock as suggested by the plaintiff. It adds no new information in relation to Mr. Khosla. The reference in the report to the mortgage being a “high risk conventional mortgage” is not a lake-breaking revelation that gives rise to a new plausible theory of liability against Mr. Khosla. The statement of claim in the 2017 Action suggests that the plaintiff was well aware that she was providing financing for the construction and renovation of the Penage Hotel.
[91] A trial is not required to fairly determine this issue. The limitation period for the claim against Mr. Khosla is long expired.
[92] In terms of the substantive merits of the claim against Mr. Khosla, I note again that the plaintiff has filed no expert evidence on the standard of care expected of a reasonably competent lawyer in the circumstances of this case. This is fatal to the claim. Even assuming there was no limitations issue, this is not a case where Mr. Khosla’s negligence is manifestly obvious from the record.
[93] More particularly, I note that Mr. Khosla prepared a Form 9D in which Ms. Greenspan specifically instructs him not to obtain an appraisal on the value of the property. As well, I note that it is far from clear whether Mr. Khosla would have been required to file a Form 9E in the circumstances of this case, and even if required, whether the failure to file one fell below the standard of care required in the circumstances and occasioned damages.
[94] Lastly, I note again that the allegations of fraud and conspiracy are simply bald allegations unsupported by any evidence. A trial is not required to fairly determine these allegations.
(c) Shaindel Goldman
[95] In considering the claim against Ms. Goldman, it is important to keep in mind that Ms. Goldman is already the subject of two actions commenced by Ms. Greenspan in relation to the same transactions involved in this action.
[96] In her factum and during oral argument, Ms. Goldman invited the court to stay or dismiss this action as an abuse of process as it is essentially duplicative of the other proceedings. There is significant merit to this position. However, I note that Ms. Goldman brought only a summary judgment motion and not a Rule 21 motion. While it would be open to the court to permit a nunc pro tunc amendment of the Notice of Motion to seek this specific form of relief, I need not consider this option. In my view, the existence of the other proceedings, particularly the 2017 Action, provides ample support for Ms. Goldman’s limitations defence in this action. In short, the claim against Ms. Goldman can be determined at this stage on the limitations issue and there is no need to address the abuse of process argument.
[97] Ms. Greenspan has already sued Ms. Goldman for her involvement in these deals. In the 2017 Action, Ms. Greenspan alleges that RWC was involved in the “renovation and development” of the Penage Hotel, and further asserts that Mr. Clarke was to monitor and control the disbursement of the funds to “ensure they were properly being allocated towards construction costs in connection with the development of the Penage Hotel….”
[98] Importantly, she alleges that Ms. Goldman and Mr. Clarke negligently and fraudulently misrepresented material aspects of the Penage Hotel mortgage transactions, and that they were engaged in “improperly diverting funds from Greenspan’s advances.”
[99] The FSCO Investigation Brief does not reveal a plausible claim that could not have been reasonably known by Ms. Greenspan prior to the date when the redacted excerpts were obtained. At best, it provides further information about the events and some evidence, by way of Ms. Goldman’s admissions against interest, of her involvement in improperly diverting funds from Ms. Greenspan’s advances. The problem for the plaintiff in relation to this action is that this claim was obviously known to her in 2017. Indeed, she has already advanced this specific claim in her statement of claim dated March 3, 2017.
[100] Lastly, I see no merit to the argument that the discovery in 2019 that Ms. Goldman acted as a law clerk for Mr. Cook and not as a mortgage agent somehow gives rise to a new claim that could not have been reasonably discovered on an earlier date.
[101] A trial is not required to fairly determine this issue. The claim against Ms. Goldman is out of time and ought to be dismissed.
Conclusion and Costs
[102] As indicated at the outset, I am satisfied that each defendant has met the test for granting summary judgement. The claim against each defendant is dismissed.
[103] I urge the parties to agree upon costs. If they are unable to do so, the parties are permitted to file costs submissions, no longer than 3 pages in length, exclusive of appropriate appendices. The defendants’ submissions shall be filed within 15 days of the release of these reasons and the plaintiff’s submissions shall be filed within 30 days.
Justice J. Di Luca
Released: September 30, 2022
[^1]: While the plaintiff also sought summary judgment in her favour, the issue was not advanced in oral argument and was abandoned during submissions.
[^2]: Kathyrn Greenspan v. Godfrey Anthony Clarke et al., CV-17-570852
[^3]: Dr. Jeffrey Greenspan et al. v. Canada Wide Financial et al., CV-19-00140993-0000
[^4]: I accept that on the mortgage charge in relation to the Whitefish Property, Mr. Cook signed and submitted that charge on title erroneously listing himself as acting for the “chargor” and not the “chargee.” As there is no issue that he was acting for the “charge”, the error is of no moment. Moreover, the error does not in my view raise concerns about whether Mr. Cook may have been acting for Ms. Greenspan in relation to the 2nd mortgage on the Penage Hotel.