Bank of Montreal v. Mukendi-Yabondo, 2022 ONSC 6301

COURT FILE NO.: CV-21-60455

DATE: 2022-11-07

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Bank of Montreal

Plaintiff

– and –

Eric Mukendi-Yabondo

Defendant

Stewart Thom, counsel for the Plaintiff

William M. Sharpe, counsel for the Defendant

HEARD: October 26, 2022

THE HONOURABLE JUSTICE M. BORDIN

REASONS FOR DECISION

nature of the motion

[1] The plaintiff, Bank of Montreal ("BMO"), moves for summary judgment against the defendant, Eric Mukendi-Yabondo, on a guarantee and a mortgage registered against the property municipally known as 64 Barbican Trail, St. Catharines, Ontario (the “St. Catharines Property”).

[2] The defendant resists the motion on the basis that there is a genuine issue requiring a trial.

[3] For the reasons set out below, the court grants the motion for summary judgment.

MATERIALS FILED ON THE MOTION

[4] At the outset of the hearing, counsel confirmed that neither party had filed a compendium. The court drew the attention of counsel to the Notice to the Profession, Parties, Public and the Media effective August 2, 2022 (the “Notice”). In particular,

Compendium Required

For hearings or conferences in civil matters, in accordance with rule 4.05.3(3) of the Rules of Civil Procedure, each party must upload to CaseLines a compendium containing key materials that will be referred to in oral argument (e.g., fair extracts of documents, transcripts, previous orders, authorities, etc.). The compendium must include only those materials that will be referred to in argument and must have a table of contents hyperlinked to the sections within it and hyperlinks to authorities cited.

Materials uploaded into CaseLines that are not brought to the attention of the judicial officer at the hearing may not be considered

The oral hearing is the occasion when arguments must be succinctly set out by the parties. Parties must bring to the attention of the court all relevant material facts and the authorities that establish the legal proposition relied upon. It is not sufficient to merely upload filed materials to CaseLines. Materials that are not brought to the attention of the judicial officer at the hearing may not be considered. Judicial officers’ judgment writing time is not sufficient to permit it to be used as an extension of the time allocated for oral argument.

[5] The court confirmed with the parties that the court would follow the Notice in that the court would not independently review all materials filed on the motion (more than 1,500 pages) but would rely on the materials that counsel specifically brought the court’s attention.

[6] Counsel confirmed the parties were prepared to proceed with the motion on that basis.

FACTS

[7] The defendant is a principal and director of Cles Fonctionnel Inc. (“CFI”).

[8] On October 23, 2017, the defendant, as director of CFI, and BMO executed a letter of agreement which contemplated BMO granting a mixed CAD/USD credit facility to CFI with a limit of $1,750,000 (the “Letter of Agreement”).

[9] The credit facility was established by way of an operating loan agreement dated December 20, 2017, which was executed by the defendant as president of CFI. Terms of the operating loan agreement included a loan limit of $1,750,000 CAD with interest accruing on Canadian funds advanced at BMO's prime plus one percent and on U.S. funds advanced at BMO's U.S. base rate plus one percent and an overdraft rate of 21 percent per annum.

[10] Among other security, BMO obtained from the defendant:

a. A personal guarantee dated December 20, 2017 guaranteeing the obligations of CFI limited to $1,750,000 plus interest accruing at three precent per annum above BMO's posted prime rate from the date of demand (the "Guarantee");

b. As security for the Guarantee, the defendant granted:

i. a second priority demand mortgage in favour of BMO in the amount of $500,000, registered on December 21, 2017 as instrument no. NR469461 (the "Mortgage") on title to the St. Catharines Property; and

ii. a second priority demand mortgage in favour of BMO in the amount of $500,000, registered on December 21, 2017 as instrument no. YR2777261 on title to the property municipally known as 9015 Leslie Street, Suite 210, Richmond Hill, Ontario (the “Richmond Hill Property”).

[11] The defendant personally negotiated with BMO with respect to establishing the credit facility. Those negotiations began in July 2017 and continued through December 2020. No evidence was brought to the court’s attention that there was any urgency to obtaining the new credit facility with BMO.

[12] The defendant acknowledges signing the documents relating to the credit facility and Guarantee.

[13] The Letter of Agreement states there was to be a registered second-ranking collateral mortgage in the amount of $500,000 registered against the St. Catharines Property and the Richmond Hill Property. The defendant owns both properties.

[14] On November 22, 2017, a month before closing, the defendant emailed Felix Ng of Saad Law P.C. (the “Lawyers”) and confirmed he agreed to use their services for the transaction on the basis that the Lawyers would represent BMO and CFI.

[15] The defendant was familiar with the type of credit facility negotiated with BMO. Prior to CFI entering into the credit facility and the Guarantee with BMO, CFI and the defendant had a similar arrangement with CIBC. The arrangement with CIBC included a guarantee supported by a second priority fixed charge over the St. Catharines Property and Richmond Hill Property in the amounts of $175,000 and $96,500 respectively.

[16] The reason for the new credit facility with BMO was to obtain more credit.

[17] On December 20, 2017, the defendant signed an acknowledgement and direction with respect to the Mortgage confirming, among other things, that the document had been fully explained to him and he understood that he was a party to and bound by the terms and provisions of the document.

[18] On February 5, 2020, BMO issued demand for payment and Notice of Intention to Enforce Security ("NITES") pursuant to section 244 of the Bankruptcy and Insolvency Act upon CFI.

[19] Together with the demand and NITES, BMO also issued demand for payment upon the defendant pursuant to his Guarantee and in accordance with the terms of the Mortgage.

[20] A notice of sale under the Mortgage was issued by BMO to the defendant on October 20, 2020. The notice of sale seeks principal as at September 2, 2020 in the amount of $1,309,250.97 USD and interest of $61,179.39 USD. It also states:

As the Charge secures only a portion of the above-noted amount, the amount now due under the Charge is as follows:

For principal as at demand for payment $500,000 CAD

on February 5, 2020

For interest at 3% as per the terms of the Guarantee $10,191.75 CAD

from February 5, 2020 to October 21, 2020

TOTAL OWING BY YOU PURSUANT TO THE $510,191.75 CAD

CHARGE as at October 21, 2020

PER DIEM INTEREST $41.09 CAD

[21] No payments have been made to BMO by the defendant or CFI following issuance of the demands, NITES and notice of sale under the Mortgage. Default has not been cured and continues.

[22] The indebtedness owed to BMO on account of the Loan and Guarantee was $1,495,381.49 USD as of June 23, 2022, converting to $1,884,180.68 CAD at the then USD conversion rate of 1.26.

[23] On October 19, 2020, CFI made an assignment in bankruptcy. As per the Form 78 Statement of Affairs circulated to creditors at the time of CFI's assignment, BMO is listed as a creditor of CFI with a claim equal to $1,746,260.

[24] The Mortgage provides that, on default of payment, BMO is entitled to possession of the mortgaged property.

[25] The Mortgage accrues interest at a rate of BMO's prime rate of interest plus five percent per annum from the date of demand. The indebtedness secured by the Mortgage was therefore equal to $603,565.75 as of June 23, 2022, not including legal and enforcement costs.

[26] The Mortgage entitles BMO to recover under the Mortgage all costs of enforcement, legal and otherwise, associated with same.

[27] None of these facts are disputed by the defendant.

[28] BMO has also commenced action CV-21-00001754 at Oshawa for the enforcement of the mortgage on the Richmond Hill Property. The defendant has pleaded the same defences and counterclaims in both actions.

[29] In submissions, counsel for BMO acknowledged that BMO’s position is that it has a mortgage for $500,000 over the two properties – the St. Catharines Property and the Richmond Hill Property. In submissions, counsel for BMO repeatedly confirmed BMO is not taking the position that the mortgages entitle BMO to enforce against both properties for $500,000 each, but that BMO is only entitled to security totalling $500,000 which is secured over the two properties.

BMO’S POSITION

[30] BMO says that there are no genuine issues requiring a trial and that summary judgment should be granted in accordance with the relief set out in its notice of motion:

a. An Order granting summary judgment against the defendant in an amount of Canadian currency sufficient to purchase the sum of $1,495,381.49 USD;

b. An Order granting summary judgment dismissing the counterclaim of the Defendant; and

c. An Order for possession of the property having the municipal address of 64 Barbican Trail, St. Catharines, Ontario, Property Identification Number 46413-0340 (LT) and being legally described as "PCL 40-1 SEC 30M141; LT 40 PL 30M141; S/T LT61489 ST. CATHARINES" and for leave to issue a writ of possession in respect of same;

d. Pre and post judgment interest from February 5, 2020 onward in accordance with the agreements between the parties or, alternatively, in accordance with the Courts of Justice Act.

THE DEFENDANT’S POSITION

[31] The defendant’s position is that the record before the court does not permit determination of issues of credibility which are necessary to determine the action and there are genuine issues which require a trial.

[32] The defendant asserts that the following issues require a trial:

a. The credit facility between BMO, CFI as borrower, and the defendant as guarantor, and the Mortgage on the St. Catharines Property are void;

b. The credit facility arrangements between BMO, CFI as borrower, and the defendant as guarantor, were subject to the granting of security by the defendant only in the principal amount of $500,000; and

c. BMO has breached its duty of honest performance of the credit facility agreement and the Guarantee, to the prejudice, detriment, and monetary loss of the defendant.

[33] In furtherance of the above, the defendant asserts that BMO took excessive security by registering a charge in the full amount of $500,000 on the St. Catharines property in addition to the Richmond Hill Property and that the defendant is therefore exposed to increased personal liability, losses, and prejudice.

[34] The defendant also asserts that there are triable issues with respect to:

a. the failure to advise the defendant to obtain independent legal advice;

b. the failure of the Lawyers to give the defendant the opportunity to review the terms of the documents he signed;

c. BMO’s representative, Ms. Monadi, and the Lawyers did not explain to the defendant the true content, nature and extent of the credit facility and Guarantee;

d. there is a triable issue with respect to the counterclaim for rectification; and

e. breach of the duty of honest performance of the contract.

[35] The defendant also raises issues with respect to hearsay evidence in BMO’s affidavits.

THE DEFENDANT’S EVIDENCE

[36] It is informative to set out the defendant’s evidence. In his affidavit, the defendant deposes that:

a. His understanding of how the charges would be registered was based on his previous dealings concerning CFI’s line of credit facility offered by the CIBC.

b. It was his understanding based on the Letter of Agreement that the amount of $500,000 would be distributed between the two properties, meaning the charge would be registered in an amount of $250,000 against the St. Catharines Property, and an amount of $250,000 against the Richmond Hill Property, or any other combination totalling an amount no greater than $500,000.

c. Ms. Monadi did not disclose or explain the entire content, nature and extent of the credit facility and Guarantee, particularly that the credit facility agreement and Guarantee purported to provide for security in the form of two mortgages each in the amount of $500,000 on each the Richmond Hill Property and the St. Catharines Property.

d. He was not given an opportunity to review the documentation before closing. The Lawyers hurriedly proffered the signature pages of the closing documents to him with multiple instructions to “sign here”.

e. The Lawyers failed to disclose to or explain to him the true content, nature and extent of the security granted under the Guarantee and particularly that two charges of $500,000 each were being registered.

f. It was not disclosed or explained to him that the mortgages purported to provide for security in the form of two $500,000 mortgages on each the Richmond Hill Property and St. Catharines Property.

g. He was not told to obtain independent legal advice as to the content, nature and extent of security being granted under the Guarantee, and as to the obligations recited or referred to in the instruments proffered for his signature.

h. He never agreed to or assumed the cumulative obligation of two purported charges of $500,000 each secured against the Richmond Hill Property and against the St. Catharines Property.

i. In or about September 2019, almost two years after the Guarantee, security, and loan documentation was signed, he spoke with Ms. Monadi by telephone and his “understanding of Monadi's response to me, which I verily believe, was that she acknowledged that BMO was in error in registering charges for $500,000 each on the Richmond Hill Property and St. Catharines Property and the most BMO should have taken security for was $500,000. My understanding of Monadi's response and representation to me, which I verily believe, was that the BMO would correct the credit facility documents, including the charges on my properties, upon the credit facility's next annual renewal.”[^1]

j. He relied on Ms. Monadi's statements by continuing to draw on the credit facility. The increased draws on the credit facility increased his personal obligation as guarantor and mortgagor.[^2]

[37] In his factum, the defendant states that he, “understood it to be that the common intention of the parties was that the amount secured under the credit loan facility was to be limited to $500,000 for both properties collectively”, and “[a]t all times, the amount secured under the credit loan facility was to be limited to $500,000.”

[38] The defendant did not lead evidence disputing the amount he would be liable for on the Guarantee.

SUMMARY JUDGMENT

[39] Pursuant to rule 20.04(2), the court shall grant summary judgment if it is satisfied that there is "no genuine issue requiring a trial". Under subsection (2.1), in determining whether there is a genuine issue requiring a trial, the court shall consider the evidence and has the power to weigh evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence, unless it is in the interest of justice for such power to be exercised only at trial.

[40] The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, guides the court on a summary judgment motion. The governing principles can be found at paragraphs 49 and 50:

[49] 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.

[50] These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as 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.

[41] The court should first determine if there is a genuine issue requiring a trial based only on the evidence before the court, without using the fact-finding powers.

[42] If there appears to be a genuine issue requiring a trial, the court should then determine if the need for a trial can be avoided by using the powers under rules 20.04(2.1) and (2.2). The court may at its 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: See Hryniak, para. 66.

[43] Numerous cases confirm, and the parties concur, that: (1) a party to a summary judgment motion must “lead trump or risk losing”; and (2) that the court is entitled to assume that the parties have put before the court all the evidence they would adduce at trial.

ANALYSIS

[44] I turn now to an analysis and a determination of the various issues raised by the defendant.

Hearsay Evidence

[45] The defendant asserts that the hearsay evidence relied on by BMO should not be admitted and that BMO has failed to provide the testimony of Ms. Monadi and the Lawyers. The defendant asserts that BMO, by not tendering the evidence of Ms. Monadi or the Lawyers as affiants, has precluded his ability to test vital testimony.

[46] The defendant asserts that BMO’s deponent did not attest in her affidavit that she verily believed the information provided to her by Ms. Monadi or the Lawyers. In breach of the Rules of Civil Procedure, BMO’s deponent did not in her affidavit aver to her belief in what she was told by Ms. Monadi. However, this was cured when, in cross-examination, the defendant’s counsel asked BMO’s deponent, “Do you believe the information that was given to you by Maryam Monadi?”, to which the deponent answered, “Yes, I do. I do believe the information given to me by phone and e-mail.”

[47] The hearsay evidence in question was put in by way of a supplementary affidavit in response to the evidence of the defendant.

[48] The evidence of BMO’s deponent as to what Ms. Monadi told her is hearsay evidence on the most significant point of contention raised by the defendant. I find that it is inadmissible as it does not meet the necessity requirement.

[49] The only explanation given by BMO for not obtaining the direct evidence of Ms. Monadi was that it is usual in these kinds of cases to have all the evidence put in by one person, usually the person in charge of special accounts. The court was not told that, nor was there any evidence that, Ms. Monadi was not available to provide an affidavit. In fact, it is clear she was consulted to obtain her version of events.

[50] The hearsay evidence in question is inadmissible and the court has not considered it.

Failure to Call the Lawyers

[51] The defendant jointly retained the Lawyers. The defendant could have called evidence from the Lawyers if he believed their evidence would have assisted him. The “failure” of BMO to submit evidence from the Lawyers does not raise a genuine issue for trial.

Interpretation of the Scope of the Mortgage

[52] The defendant relies on Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014], 2 S.C.R. 633, for the modern approach to contractual interpretation. I find useful the summary of these principals set out by the Supreme Court of Canada in Corner Brook (City) v. Bailey, 2021 SCC 29, 460 D.L.R. (4th) 169, at paragraph 20:

… Sattva directs courts to “read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract”: para. 47. This Court explained that “[t]he meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement”, but that the surrounding circumstances “must never be allowed to overwhelm the words of that agreement”: paras. 48 and 57. “While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement”: para. 57. This Court also clarified that the relevant surrounding circumstances “consist only of objective evidence of the background facts at the time of the execution of the contract. . . , that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting”: para. 58.

[53] The documents tendered in evidence clearly set out that part of the security was a blanket mortgage in the amount of $500,000 on two properties owned by the defendant.

[54] The defendant was aware of this because he executed the Letter of Agreement which set this out. In addition, on October 13, 2017, the defendant wrote to Ms. Monadi and stated: “It has always been our understanding throughout our numerous discussions from the very beginning that due to the fact that the first 500k line is un-margined and secured by collateral mortgage, it can be used as we see fit.”

[55] The defendant repeatedly sets out his understanding of the security. He does not deny there was to be a mortgage on the two properties. He does not deny it was a collateral mortgage. He says he understood that a portion of the $500,000 was to be secured against the Richmond Hill Property and a portion against the St. Catharines Property. There is no document which says this. There is no evidence this was communicated to BMO prior to contracting. The documentary evidence, including that referred to above, runs contrary to the defendant’s alleged understanding.

[56] The defendant has not pointed to any objective evidence of background facts at the time of the execution of the contract which was known or reasonably could have been known to both parties before the contract was executed that would indicate the parties intended the mortgage to be “split” between the two properties. If this is what the defendant intended, it is not a relevant consideration as it was not a fact that was also known or reasonably ought to have been known to BMO.

[57] It is self-evident that the evidence of what the defendant understood from the telephone conversation with Ms. Monadi two years after the agreement is not evidence which can be considered to interpret the contract as it is not evidence “at the time of the execution of the contract”.

[58] The defendant points to the lack of a cross-credit provision. The defendant says the mortgages allow BMO to enforce against each property up to $500,000, for a potential total of $1,000,000. The defendant confirmed in submissions that this is what the defendant means by BMO taking excessive security. The defendant does not contest that BMO is entitled to security of $500,000.

[59] BMO has acknowledged that it can only enforce the mortgages to a maximum of $500,000 – whether against one of the properties or against both. This is consistent with the contract as a whole, given the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.

Validity of the Guarantee of the Credit Facility

[60] There is no evidence to suggest that the Guarantee and the credit facility are void. This issue was not even argued by the defendant. There is no genuine issue requiring a trial on the validity of the Guarantee and the credit facility.

Independent Legal Advice

[61] BMO was not required to advise the defendant to seek independent legal advice. It was not necessary for the defendant to obtain independent legal advice prior to signing the Guarantee or other credit facility documents as he was a director and principal of CFI and received the direct benefit of the loan: See Toronto-Dominion Bank v. 1503345 Ontario Ltd., 2006 CanLII 16373 (ON SC), at paragraph 23.

[62] As has been repeatedly held, and as set out at paragraph 54 of RBC v. 164393, 2019 ONSC 5145, citing Bank of Montreal v. Featherstone, 1989 CanLII 4218 (ON CA), 1989 CarswellOnt 164 (C.A.), “[t]he lack of independent legal advice does not invalidate a guarantee in the absence of evidence of non est factum, unconscionability, fraud, misrepresentation or undue influence.”

[63] There is no evidence of misrepresentations made to the defendant at the time of contracting. The evidence of what transpired two years later in the conversation with Ms. Monadi is evidence of what the defendant understood from the telephone call, not what Ms. Monadi said. There is no evidence to support a defence of non est factum, unconscionability, fraud or undue influence, nor were these argued.

[64] It is also clear that the defendant had legal advice or the opportunity to obtain legal advice. The defendant jointly retained the Lawyers. In cross-examination, the defendant acknowledged that, during the relevant time, CFI had available to it a lawyer who acted as a “consultant”.

[65] The lack of independent legal advice does not raise a genuine issue requiring a trial.

Lack of Opportunity to Review Documents

[66] The evidence, and the fact, is that the defendant negotiated the credit facility with BMO. The terms of the credit facility and the Guarantee were set out in the relevant documents, including the Letter of Agreement signed by the defendant, well in advance of closing.

[67] The defendant had prior experience with similar, if not identical, credit facilities with CIBC.

[68] It is not sufficient to simply assert that one did not review the documents. There is no evidence that the defendant asked for time to review them, nor that the defendant asked the Lawyers to explain the documents.

[69] There was nothing to suggest to BMO that it ought to infer that, contrary to what the signed documents said, the defendant had not read the documents.

[70] The lack of opportunity to review documents does not raise a genuine issue requiring a trial.

Breach of Duty of Honest Performance

[71] The defendant asserts that the failure of BMO to rectify the documents to conform with his understanding of the telephone conversation with Ms. Monadi amounts to a breach of duty of honest performance. The defendant relies on C.M. Callow Inc. v. Zollinger, 2020 SCC 45, [2020] S.C.J. No. 45, at paragraph 91, where the Supreme Court stated in part:

At the end of the day, whether or not a party has “knowingly misled” its counterparty is a highly fact-specific determination, and can include lies, half-truths, omissions, and even silence, depending on the circumstances. I stress that this list is not closed; it merely exemplifies that dishonesty or misleading conduct is not confined to direct lies. …

[72] Even accepting the defendant’s evidence, at its best, it is evidence of what the defendant took away from the conversation, not what was said to him by Ms. Monadi. Further, it confirms the position taken by BMO that the security is limited to $500,000.

[73] The defendant alleges that Ms. Monadi failed to explain the meaning of the Guarantee and the credit facilities to the defendant.

[74] There is no evidence to support an assertion that BMO owed a fiduciary duty to the defendant. As stated by the Ontario Court of Appeal in Baldwin v. Daubney (2006), 2006 CanLII 32901 (ON CA), 83 O.R. (3d) 308:

[12] It is settled law also that, barring a special relationship or exceptional circumstances, the relationship between a bank and its customer is that of debtor and creditor. The motion judge set out the applicable law at para. 78 of the reasons, as recently summarized by this court in Pierce v. Canada Trustco Mortgage Co., 2005 CanLII 15706 (ON CA), [2005] O.J. No. 1886, 254 D.L.R. (4th) 79 (C.A.), at para. 27:

Generally speaking, the relationship between a financial institution lender and its customer borrower is a purely commercial relationship of creditor and debtor. Absent any special relationship or exceptional circumstances such as would give rise to a fiduciary duty (which is not pleaded by Mrs. Pierce), the courts have consistently held that the lender owes no duty to the borrower in connection with the making of the loan. In particular, the bank owes no duty to its customer to advise the customer not to undertake the loan: See Bertolo v. Bank of Montreal, (1986), 1986 CanLII 150 (ON CA), 57 O.R. (2d) 577, 33 D.L.R. (4th) 610 (C.A.), and Bank of Montreal v. Duguid (2000), 2000 CanLII 5710 (ON CA), 47 O.R. (3d) 737, 185 D.L.R. (4th) 458 (C.A.).

[13] We agree with the motion judge that there were no genuine issues of material fact with respect to the relationship between the appellants and their respective financial institutions.

[75] For the reasons set out above, there is no genuine issue requiring a trial with respect to a breach of duty of honest performance and an alleged failure of Ms. Monadi to “explain the entire content, nature and extent of the credit facility and guarantee, particularly that the credit facility agreement and guarantee purported to provide for security in the form of two mortgages each in the amount of $500,000 on each the Richmond Hill Property and the St. Catharines Property.”

Rectification

[76] The parties both referenced the Supreme Court of Canada decision in Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 S.C.R. 678, with respect to the requirements for rectification, two of which are that a party seeking rectification must show the existence and content of the inconsistent prior oral agreement, and the way in which the instrument should be rectified to correctly record what the parties agreed to (See also Canada (Attorney General) v. Fairmont Hotels Inc., 2016 SCC 56).

[77] In paragraph 36 of Fairmont Hotels, the Supreme Court confirmed that:

… the applicable standard of proof to be applied to evidence adduced in support of a grant of rectification is that which McDougall identifies as the standard generally applicable to all civil cases: the balance of probabilities. But this merely addresses the standard, and not the quality of evidence by which that standard is to be discharged. As the Court also said in McDougall (at para. 46), “evidence must always be sufficiently clear, convincing and cogent”. A party seeking rectification faces a difficult task in meeting this standard, because the evidence must satisfy a court that the true substance of its unilateral intention or agreement with another party was not accurately recorded in the instrument to which it nonetheless subscribed. A court will typically require evidence exhibiting a high degree of clarity, persuasiveness and cogency before substituting the terms of a written instrument with those said to form the party’s true, if only orally expressed, intended course of action. …

[78] On the evidence tendered, the defendant has not established entitlement to rectification nor a genuine issue for trial on the issue of rectification.

CONCLUSION

[79] There is no genuine issue for trial. It is not necessary to use the powers found in rules 20.04(2.1) and (2.2). The Guarantee is valid and enforceable the defendant. The Mortgage is valid and enforceable. The defendant does not dispute the amount BMO says is owed.

[80] BMO shall have Judgment as follows:

a. An order granting summary judgment against the defendant in an amount of Canadian currency sufficient to purchase the sum of $1,495,381.49 USD but not to exceed $1,750,000 CAD plus any interest or costs in accordance with the terms of the Guarantee;

b. The counterclaim of the defendant is dismissed;

c. An order for possession of the property having the municipal address of 64 Barbican Trail, St. Catharines, Ontario, Property Identification Number 46413-0340 (LT) and being legally described as "PCL 40-1 SEC 30M141; LT 40 PL 30M141; S/T LT61489 ST. CATHARINES";

d. Pre and post judgment interest from February 5, 2020 in accordance with the agreements between the parties.

[81] Finally, as conceded by BMO, enforcement of the mortgages registered against the St. Catharines Property and Richmond Hill Property is limited to a maximum cumulative amount of $500,000 plus any interest and costs in accordance with the terms of the mortgages.

COSTS

[82] The parties are encouraged to resolve the issue of costs of the motion and the action between themselves. If they are unable to do so, they may submit a bill of costs and make written submissions consisting of not more than three double-spaced pages in length according to the following timetable:

a. BMO is to serve its bill of costs and submissions by Monday, November 21, 2022.

b. The defendant is to serve his responding submissions, if any, no later than Monday, December 5, 2022.

c. All submissions are to be filed with the court, with a copy being provided by email to my assistants at St.Catharines.SCJJA@ontario.ca, by Tuesday, December 6, 2022.

[83] If no submissions or any written consent to an extension are received by the court by December 6, 2022, the matter of costs will be deemed to have been settled.

M. Bordin, J.

Released: November 7, 2022