COURT FILE NO.: CV-20-3673
DATE: 2022 10 27
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RITA WILSON and ANTHONY WILSON
Plaintiffs
– and –
RAAVAL KANICK and PROFESSIONAL BUSINESS ADVISORS OF CANADA INC.
Defendants
Adam Jarvis, for the Plaintiffs
Steven Pickard, for the Defendants
HEARD: June 8, 2022
REASONS FOR DECISION
DALEY J.
INTRODUCTION:
[1] The defendants moved for summary judgment (a) in favour of the plaintiffs in the sum of $10,142.87 and (b) an order otherwise dismissing the action.
[2] In summary, this action arises from a commercial arrangement between the plaintiffs, who are husband and wife, as investors, with the defendant Professional Business Advisors of Canada Inc. (“PBA”) as represented by the defendant Raaval Kanick (“Kanick”) its sole director and officer. PBA acted as an investment agent on behalf of the plaintiffs to invest the sum of $200,000 in real estate.
[3] In this action, the plaintiffs assert that the defendants are liable to them on several bases, including the defendants’ material and fraudulent misrepresentations, breaches of fiduciary duty and unjust enrichment. The plaintiffs also seek an accounting with respect to the investment monies given over to the defendants.
[4] On this motion the defendants assert that this case is “anti-Hryniak” on the basis that the plaintiffs’ claims involve very small amounts and that the costs of this action are disproportionate to the issues and the amounts at stake and further, given that there is no genuine issue requiring a trial, the defendants should be granted summary judgment on the current evidentiary record.
[5] The defendants further submit that the evidence adduced by them is more than sufficient for the court to determine that there is no genuine issue requiring a trial and that the plaintiffs’ responding evidence does not overcome the weight of the evidence introduced by the defendants.
[6] For the reasons set out below, I have concluded that the defendants have failed to discharge the burden to show that there is no genuine issue requiring a trial. I have further concluded that utilizing the fact-finding powers available in rule 20.04 (2.1) and (2.2) would not represent a fair and just alternative to a trial having regard to proportionality and fair access to justice. Were the fact-finding powers applied in this case, the result would be virtually a full trial on the issues at stake in the action as framed by the pleadings.
[7] Furthermore, I do not have confidence that I can find the necessary facts and apply the relevant legal principles so as to resolve this dispute in a fair and just manner: Hryniak v. Mauldin, 2014 SCC 7 at para 49.
EVIDENTIARY RECORD & FACTUAL BACKGROUND:
[8] The evidentiary record adduced by the parties is contradictory in significant respects and also involves credibility assessments on affidavit evidence all of which makes fact-finding most unreliable.
[9] The defendants move, as part of their motion, to strike a reply affidavit from the plaintiff, Anthony Wilson, delivered on May 9, 2022, on the grounds that the cross-examination of this witness was adjourned on the basis that he had refused to answer proper questions.
[10] Counsel for the defendants sought to have an urgent motion hearing relating to the cross-examination of this witness and compelling his re-attendance, however the court previously declined to provide an urgent motion date given the nature and timing of the proposed motion.
[11] The circumstances surrounding the cross-examination of Anthony Wilson and the defendants’ motion to strike his affidavit, including the submissions of counsel, left much doubt as to whether the affidavit could properly be struck and as such I deny the defendants’ motion in this respect.
[12] As to the underlying facts on this motion, on October 22, 2013, the defendant PBA by its principal and co-defendant Kanick, entered into an agreement whereby the plaintiffs provided $200,000 to the defendants to invest in real estate to be purchased, and a home which was to be renovated and sold with the profits to be paid to the plaintiffs annually on December 31 of each calendar year. In accordance with the written agreement the parties entered into, the defendants were allowed to invest these monies at their discretion and the defendant, Kanick guaranteed the terms and conditions of this agreement on behalf of the corporate party, PBA.
[13] This agreement in writing, which was signed by the parties on October 22, 2013, expressly provided that the defendants would invest the plaintiffs’ “funds used for real estate purchase and the profit is to be paid on an annual basis ending December 31. The first payment to be made on December 31, 2014.”
[14] The agreement further provided that the funds were being used “at the sole direction of PBA of Canada Inc. and its director, Raaval Kanick.”
[15] Contrary to this agreement, there is no evidence that the defendants made any payments to the plaintiffs relating to any profits realized as required by the agreement.
[16] In August 2015, the defendant Kanick advised the plaintiffs that there had been a change in the plan as to how the plaintiffs’ funds would be invested. Instead of investing in resale homes, it was decided by the defendants that the funds would be invested into new homes to be built in 2017.
[17] On August 9, 2016, the plaintiffs and the defendant PBA by its director Kanick executed a new agreement. This agreement was intended to replace the original agreement executed in October 2013 and called for the plaintiffs’ funds to be invested in two properties located in Niagara Falls both with tentative sale closing dates in 2017. The new agreement provided:
The two above-mentioned properties are to be listed and sold at a reasonable time, immediately after the closing date. Once the properties have been sold firm and new buyers have taken title, your capital investment of $200,000 will be returned to you in full, along with 75% of the net interest. This is the gross profit minus expenses such as real estate fees, lawyer’s fees, government taxes, builder’s charges, land transfer fees, any utility costs, property taxes, mortgage payments, interest and any maintenance cost, until property is sold.
[18] In accordance with the terms of this new agreement, the plaintiffs’ funds were to be invested in the two Niagara Falls properties more particularly described in the agreement. In 2017, contrary the terms of this new agreement, it was determined by the plaintiffs that the properties in question were in fact acquired, unknown to the plaintiffs, by the defendant Kanick’s wife, Nikki Kanick.
[19] The two properties were eventually sold and on November 5, 2017, the parties PBA, the plaintiffs, Nikki Kanick and the defendant Kanick all signed a document entitled Letter of Settlement and Release (“LSR”) in respect of the sale of the first Niagara Falls properties sold.
[20] The plaintiffs executed the LSR without having received any legal advice.
[21] The LSR had attached to it, two documents, one providing particulars as to the purchase cost of the first property at $340,251.18 plus closing costs of $55,025.67 resulting in a total purchase price on closing of $395,276.85.
[22] The second attachment to the LSR set out a breakdown of the sale price of the home at $510,000, less sales expenses of $70,873.98, resulting in a net amount received on closing of $439,126.
[23] The LSR and the attached financial documents were drafted by the defendants and according to the second of the attached documents, after taking into account the sales expenses, the sale of the property resulted in a profit of $43,849.17 (net sale price of $439,126.02 minus purchase price including closing costs of $395,276.85 = $43,849.17).
[24] Applying the profit percentage of 75% to the purported profit of $43,849.17, the defendants advised the plaintiffs that they were entitled to receive $32,886.87, along with half of their initial investment of $100,000, for a total payment to the plaintiffs of $132,886.87. On the plaintiffs’ signing of the LSR on November 5, 2017, they were provided with funds in this amount.
[25] On January 24th, 2018, the same parties executed a similar LSR relating to the sale of the second Niagara Falls property.
[26] This LSR had attached to it two financial documents similar to those attached to the first LSR, one setting out the purchase price and closing costs of $330,568.71 and $65,221.56 respectively for a total purchase price for the property of $395,790.27.
[27] The second attachment set out the sales price of $460,000 less sales expenses as represented at $54,053.91, leaving a net sale price of $405,946.09. The net profit on the sale of this second property was then represented to be $10,155.27 ($405,946.09 minus $395,790.27 = $10,155.82). Applying the plaintiffs’ percentage of profit at 75% the defendants calculated that the plaintiffs were entitled to a profit share of $7,616.87. The defendants paid to the plaintiffs the sum of $100,000 representing their unpaid capital plus the profit on the second property of $7616.87 for a total amount of $107,616.87.
[28] Both LSRs provided that certain additional holdback monies would be later paid to the plaintiffs after certain tax assessments were to be completed. As of the date of the commencement of their action, none of the so-called holdback funds or any part of them were paid to the plaintiffs.
[29] Although the record has not explained how the so-called holdback amounts from each LSR were calculated, at some point it appears that the total holdback in respect of both transactions was quantified by the defendants at $48,000.
[30] The defendants represented that the so-called holdback monies of $48,000 were being held in trust by their lawyer, however it was subsequently determined during the course of this litigation and this summary judgment motion that the holdback monies were in fact held by the defendant Kanick’s wife, Nikki Kanick, and that she had used the holdback funds to invest in her own business.
[31] In the course of this summary judgment motion, prior to the hearing date, the defendants advised that after certain adjustments the actual amount of the so-called holdback funds was $10,142.87 and thus as part of the relief sought by the defendants on their summary judgment motion, they seek a judgment in favour of the plaintiffs in that amount as well as the dismissal of the action.
[32] Following an order for production made by Dennison J. at the request of the plaintiffs, certain financial records and source documents were provided by the defendants to the plaintiffs prior to the return of the defendants’ summary judgment motion. The documents disclosed significant discrepancies between the financial information set out in the attachments to the LSRs and the financial disclosure made otherwise to third parties, including the Canada Revenue Agency.
LEGAL FRAMEWORK:
[33] In its decision in Hryniak the Supreme Court, in considering the interpretation and the scope of rule 20 on summary judgment motions, emphasized that the rule should be interpreted to advance access to justice by favouring affordable, and proportionate determinations of claims.
[34] Rule 20.04 provides that summary judgment should only be granted where the court is satisfied that there is no genuine issue requiring a trial.
[35] Further, rule 20.04 (2.1) provides that in determining whether there is a genuine issue requiring a trial the court can weigh the evidence, draw reasonable inferences, and assess credibility, unless it would be in the interests of justice to have those powers exercised at trial.
[36] In Hryniak, at para. 49, the court stated that there will be no genuine issue requiring a trial where a judge “is able to reach a fair and just determination on the matter.” The court further stated that: “The standard for fairness is not whether the procedure is exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.” See: para 50.
[37] The court further stated that: “What is fair and just turns on the nature of the issues, the nature and strength of the evidence and what is the proportional procedure.” See: para 59.
[38] The court in Hryniak, at para. 48 noted that summary judgment motions would most often be appropriate where cases were document driven, with few witnesses and limited contested factual issues: see also Belec v Sun Life Assurance Company of Canada, 2022 ONSC 3523 at para. 37.
[39] In Irving Ungeman Ltd. v. Galanis (C. A.), 1991 7275 (ON CA) the court stated as follows:
“It is safe to say that “genuine” means not spuriously, and more specifically that the words “for trial” assist in showing the meaning of the term. If the evidence on a motion for summary judgement satisfies the court that there is no issue of fact which required a trial for its resolution, the requirements of the rule have been met. It must be clear that a trial is unnecessary. The burden is on the moving party satisfy the court that the requirements of the rule have been met. Further, it is important to keep in mind that the court’s function is not to resolve an issue of fact but to determine whether a genuine issue of fact exists.”
[40] In considering a summary judgement motion the court is required to follow the
analytical approach set out in Hryniak, at para 66 which has been summarized as follows:
First, the motion judge should have determined if there was a genuine issue requiring a trial based only on the evidence before her, without using the enhanced fact-finding powers under r. 20.04 (2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Second, if there appeared to be a genuine issue requiring a trial, the motion judge should have determined if the need for trial could be avoided by using the enhanced powers under r. 20.04 (2.1) – which allowed her to weigh evidence, evaluate the credibility of the deponent, and draw any reasonable inference from the evidence – under r. 20.04 (2.2) to order that oral evidence be presented by one or more parties: see – Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98 at para. 24.
[41] There is no imperative on the court to use the summary judgement powers in every case. As affirmed by the Supreme Court in Hryniak at para. 28 the overarching goal remains to have “a fair process that results in a just adjudication of disputes.”
[42] As to the respective obligations of the parties on a summary judgement motion, it is important to consider the statements of Nordheimer J.A. in Dia v. Calypso Theme Waterpark, 2021 ONCA 273 at paras. [24] and [25] which reads as follows:
This error appears to have arisen from the motion judge’s misunderstanding of the body of case law regarding the obligation of parties on both sides of a motion for summary judgment to “put [their] best foot forward”. The obligation on the responding party is often captured by the expression “a respondent on a motion for summary judgment must lead trump or risk losing”: 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 1995 1686 (ON CA), 21 O.R. (3d) 547 (C.A.), at p. 557.
The fact that both sides to a motion for summary judgment may bear evidentiary burdens does not alter where the onus or burden of proof originates. On this point, I repeat the explanation of the burden of proof enunciated by Brown J.A. in Sanzone v. Schechter, 2016 ONCA 566, 402 D.L.R. (4th) 135, at para. 30, leave to appeal refused, [2016] S.C.C.A. No. 443, where he said:
First, the evidentiary burden on a moving party defendant on a motion for summary judgment is that set out in rule 20.01(3) – "a defendant may... move with supporting affidavit material or other evidence." As explained in Connerty, at para. 9, only after the moving party defendant has discharged its evidentiary burden of proving there is no genuine issue requiring a trial for its resolution does the burden shift to the responding party to prove that its claim has a real chance of success.
ANALYSIS:
[43] The defendants submit that the following issues be decided on their summary judgment motion: (a) should summary judgment be granted; (b) should the LSRs be set aside?; (c) should the affidavit of Anthony Wilson be struck?
[44] The issue as to Anthony Wilson’s reply affidavit has been addressed above.
[45] I have concluded that summary judgment cannot be granted in the circumstances of this case as there are genuine issues requiring a trial that cannot fairly be determined on the evidentiary record adduced.
[46] The issues as outlined by counsel for the defendants are intertwined such that the evidentiary record, as a whole, applies to all of the arguments being advanced on behalf of the defendants.
[47] As to the issue of whether the LSRs should be set aside – that is not the purpose of a motion for summary judgment. As noted by the court in Irving: …. “It is important to keep in mind that the court’s function is not to resolve an issue of fact but to determine whether a genuine issue of fact exists.”
[48] Following documentary disclosure as ordered by the court, before the return of this summary judgement motion, and as outlined in the affidavit material submitted on behalf of the plaintiffs, there have been various representations made by the defendants as to what was the adjusted profit on the sale of the two properties in question.
[49] It was submitted on behalf of the defendants that the LSR’s were both executed by the plaintiffs, without any further inquiry by them as to the veracity and accuracy of the financial information outlined in the documents accompanying each LSR. It’s further asserted that the plaintiff, Rita Wilson executed the LSRs, even though she acknowledged that she suspected that the information contained may not be accurate. Notably, in her evidence on cross-examination, this plaintiff stated that she felt they had no choice but to sign the LSRs in 2017 and 2018, given that they wanted the return of their capital investment and were concerned that it might never be returned to them. The plaintiffs had turned over to the defendants the sum of $200,000 in 2013 and until 2017 and 2018 they had received none of the capital returned nor any profit payments as had been promised by the defendants and required under the first contract.
[50] As a result of the documentary disclosure received by the plaintiffs leading up to the argument of the summary judgment motion, various source documents were eventually made available to them which have allowed them to compare the figures put forward by the defendants against the late-disclosed documentary evidence which the plaintiffs received only after production of the records was ordered by the court.
[51] For ease of reference, I will use the tables prepared by counsel for the plaintiffs, which were included in his factum, where the various expenses offsetting the sale prices on these properties are set out. Most of the evidence contained in the plaintiffs’ responding affidavit material, which is summarized in these tables, is uncontradicted by any evidence adduced on behalf of the defendants.
[52] The tables below summarize the purchase and sale prices as well as the offsetting expenses for each of the properties. The column entitled “Nikki” outlines details of the representations made by this party in respect of her potential personal tax liability to the Canada Revenue Agency.
8001 Hackberry
7985 Hackberry
Source Documents
Nikki
Raaval Release
Raaval Aff
Total Purchase
$366,442.73
$330,568.71
$395,790.27
$330,568.71
Sale
$460,000
$460,000
$460,000
$460,000.00
Expenses
$57,287.21
$54,053.91
$81,906.85
Adjusted profit
$93,557.27
$72,144.08
$54,0593.91
$47,524.44
HST CLAW BACK
NA
$25,138.30
$42,973.94 (included in Total purchase)
NA
Lender fee
$12,000 + $973 legals
$12,573.62
$12,573.62
NA
Mrtg payments
There are some cheques from entities that are not the Defendants (unknown)
$12,083.35
$12,083.35
NA
[53] As summarized in the tables above, the defendants have made certain representations to the plaintiffs at the time of the execution of the LSRs which differ significantly from the information contained in the source documents produced and as well from representations made by Nikki to the Canada Revenue Agency.
[54] It is submitted on behalf of the defendants that the settlements set out in the LSRs are binding and as such there is no genuine issue relating to the settlements which requires a trial.
[55] The defendants have offered no evidence to explain or reconcile the differences between their alleged representations and the documentary evidence which is summarized in the tables above.
[56] The plaintiff, Anthony Wilson states in his affidavit that the plaintiffs did rely upon the calculations set out in the LSRs and the attached documents prior to their execution.
[57] While there may be some variance in the degree of reliance placed on the financial information contained in the LSRs as between the plaintiffs, I am of the view that the level of reliance and whether the absence of reliance would make the LSRs enforceable is a genuine issue requiring a trial which cannot be resolved on the current record nor through the fact-finding options provided for in rule 20.
[58] Furthermore, based on the financial information and representations which have been disclosed by the defendants after the institution of the summary judgment motion, I have concluded that there is a genuine issue requiring a trial as to whether there were misrepresentations or fraudulent misrepresentations by the defendants as to the actual costs incurred, which were deducted from the sale prices of the two properties. Again, on the present record, these issues cannot be resolved.
[59] In addition to the defendants’ position that the LSRs are enforceable, alternatively the defendants submit that the plaintiffs’ claim is statute barred.
[60] The question for a court on a summary judgment motion ,where it is asserted on behalf of the moving party that an action is statute barred, is not whether the limitation defence is sure to fail, but whether there is a genuine issue respecting the discoverability that requires a trial: Collins v. Cortez, 2014 ONCA 685 at para 11.
[61] In their reply to the statement of defence raising the limitation period, the plaintiffs assert that (a) they did not know of the damages as a result of the misrepresentations made by the defendants as later determined in relation to the LSRs; (b) the defendants acknowledged indebtedness to the plaintiffs in their statement of defence as well as in correspondence from the defendants dated August 20, 2020, and an email from their counsel dated October 30, 2020.
[62] Further at the time the LSRs were executed in 2017 and 2018, the defendants represented that it would take approximately two years before the $48,000 holdback amount would be released. Following the signing of the LSRs, the defendants represented that would take two years to resolve the holdback issue.
[63] It is not necessary for this court to determine whether the plaintiffs’ claims are statute barred, however on the whole of the evidentiary record presented, I have concluded that there is a genuine issue requiring a trial and full evidentiary record in order to determine whether a limitation period has intervened resulting in the plaintiffs’ claims being barred.
[64] Similarly as to the enforceability of the LSRs, I have concluded that there is a genuine issue requiring a trial with respect to the validity and enforceability of the terms contained in these documents as a result of the uncontradicted evidence as to the various representations made by the defendants as to the costs incurred prior to the sale of the properties, resulting in the reduction in the net proceeds of sale in which the plaintiffs may have been entitled to share.
CONCLUSION:
[65] For the reasons outlined above, I have concluded that the defendants’ summary judgment motion must be dismissed.
[66] As to the costs of this motion, in the event counsel cannot agree on costs, counsel for the plaintiffs shall serve and file submissions as to costs of no longer than two pages, plus a costs outline within 20 days from the date of release of these reasons, followed by similar submissions on behalf of the defendants within 20 days thereafter. No reply cost submissions shall be delivered.
Daley J.
Released: October 27, 2022
COURT FILE NO.: CV-20-3673
DATE: 2022 10 27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
RITA WILSON and ANTHONY WILSON
Plaintiffs
- and –
RAAVAL KANICK and PROFESSIONAL BUSINESS ADVISORS OF CANADA INC.
Defendants
REASONS FOR DECISION
DALEY J.
Released: October 27, 2022