COURT FILE NO.: CV-19-589

DATE: 20221123

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CWB National Leasing Inc.

Plaintiff

– and –

2536967 Ontario Ltd., and Julio Echeverria also known as Julio Cesar Echeverria

Defendants

Mr. David Downs, for the Plaintiff

Mr. Domenic Saverino, for the Defendants

HEARD: November 22, 2022

REASONS FOR DECISION ON MOTION

cONLAN J.

I. The Motion, the Facts, and the Positions of the Parties

[1] The Plaintiff, CWB National Leasing Inc. (“CWB”), moves for summary judgment on its claim against the Defendants, 2536967 Ontario Ltd. (“253”) and Julio Echeverria also known as Julio Cesar Echeverria (“Julio”).

[2] CWB leased a 2016 Ford F-750 truck (“truck”) to the Defendants. The lease commenced on October 1, 2016 and went into default on April 1, 2017. Ultimately, CWB had the truck repossessed and then sold at an auction.

[3] The sale by auction occurred in January 2019 and resulted in net proceeds of $19,582.25.

[4] CWB claims for $157,840.15, after credit for the net proceeds of sale of the truck, plus interest at 24% per annum commencing on April 1, 2017 (the date of default), plus costs on a substantial indemnity basis.

[5] The $157,840.15 is comprised of $175,829.10 (49 payments owing at the rate of $3,588.35 per payment), plus a registration release fee of $169.50, plus a buyout fee of $11.30, plus $1,412.50 paid to the bailiff to recover the truck after default, less the net proceeds of sale in the amount of $19,582.25.

[6] The main issue is the personal liability of Julio, although there are other issues raised by the Defendants including whether CWB failed to sell the truck in a commercially reasonable manner.

[7] CWB takes the position that it would have never leased the truck without Julio being a co-lessee because 253 had only just been incorporated in September 2016, about one year before the lease commenced.

[8] The lease agreement itself clearly shows two signatures – Julio as President of and on behalf of 253, and Julio himself.

[9] The Defendants not only defended the action but also counterclaimed against 2401150 Ontario Ltd. (“240”) and Jean St. Gelais also known as Jean Marie St. Gelais (“Jean”).

[10] 240 has been noted in default. Jean was never served with the Defendants’ pleading because he passed away in April 2018.

[11] In their pleading, the Defendants alleged that Julio is a high school graduate from Guatemala whose first language is Spanish and who is not at all proficient in English. Looking for work as a truck driver, he met up with Jean. According to Julio, Jean duped him into signing the lease agreement with CWB under the guise of Jean helping Julio to start his own trucking business. Specifically, it is alleged by Julio that he never intended to sign and never understood that he was signing in his personal capacity.

[12] In their factum filed on the within motion for summary judgment, the Defendants query whether the claim can be fairly adjudicated on a motion of this type, and on the merits of the motion they ask that it be dismissed.

[13] Further, the Defendants make these submissions at paragraph 108 of their factum, regarding the defence of non est factum:

It is respectfully submitted that this is a case where the defence of Non est factum is available to Julio as the circumstances surrounding Julio's experience are specifically the circumstances the defecnes [sic] of non est factum is applicable to Julio was misguided as to the contents and very nature and character of the documents he signed. He was not careless. He is simple hardworking man who was taken advantage of. The Lease should be declared void and unenforceable.

[14] In addition, the Defendants argue that the Plaintiff did not sell the truck, after repossession, in a commercially reasonable manner. Paragraphs 111-113 of the Defendants’ factum are set out below (footnotes excluded).

111. The Plaintiff by its own actions increased the damages it is claiming. The Plaintiff was aware of the location of the Vehicle on May 17,2017. On July 10, 2017, Julio signed a Notice of Surrender surrendering the Vehicle to National Leasing. The Vehicle was repossessed on February 16, 2018. The Vehicle was sold for $19,582.25 in January 2019, 18 months after the signing of the Notice of surrender.

112. In or about November 2017 the Plaintiff had agreed to sell the Vehicle to Over the Road. The Plaintiff sold the Vehicle to Over the Road for $50.000.00 plus applicable taxes in an as is condition.

113. Despite having a firm purchase and sale agreement for the Vehicle, the Plaintiff did not pursue Over the Road to take steps to complete the transaction. The Plaintiff’s position was that you cannot force someone to pay you when the person cannot pay you. The Plaintiff s actions itself caused additional damages in the amount of $36,917.75, the difference from the sale to On the Road the Plaintiff did not pursue to enforce and the actual amount received on the sale of the Vehicle.

[15] Finally, the Defendants submit that the 24% per annum interest rate ought to give way to a more reasonable and conscionable rate, namely, that under the Courts of Justice Act.

[16] For its part, CWB submits that this is an appropriate case where the merits of the claim and the defences advanced can be fairly adjudicated on a motion for summary judgment, and that none of the arguments put forward by the Defendants is meritorious (at least not as against CWB’s claim), and that there is no genuine issue for trial.

II. The Law on Summary Judgment

[17] There is no controversy between the parties regarding the legal principles applicable to motions for summary judgment.

[18] The granting of summary judgment is mandatory if the moving party (CWB) persuades the Court on a balance of probabilities that there is no genuine issue requiring a trial – 20.04(2)(a) of the Rules of Civil Procedure.

[19] In deciding whether there is a genuine issue requiring a trial, the Court may do any or all of the following, unless it is determined that the interest of justice, in the particular case at hand, dictates that these additional powers should only be exercised at trial: (i) weigh the evidence, (ii) evaluate credibility, and (iii) draw reasonable inferences – 20.04(2.1).

[20] This Court agrees with and adopts the following comments made by Justices Corbett and Dunphy, set out at paragraph 33 of CWB’s factum filed on the within motion for summary judgment.

33. In 2313103 Ontario Inc, et al. v. JMFood Services Ltd. et al., Dunphy J. of the Ontario Superior Court of Justice stated:

[39] Corbett J. has provided a summary of the approach to be taken by this court in summary judgment motions following the Supreme Court of Canada's decision in Hryniak v. Mauldin, 2014 SCC 8 in the case of Sweda Farms Ltd, v Egg Farmers of Ontario, 2014 ONSC 1200 which I (along with many other ofmy fellow judges) have adopted as a concise guideline to be applied in such motions (from paras. 33-34 of Sweda):

"33. As I read Hryniak, the court on a motion for summary judgment should undertake the following analysis:

1. The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;

2. On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;

3. If the court cannot grant judgment on the motion, the court should:

a. Decide those issues that can be decided in accordance with the principles described in (2), above;

b. Identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues;

c. In the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion.

34. The Supreme Court is clear in rejecting the traditional trial as the measure of when a judge may obtain a "full appreciation" of a case necessary to grant judgment. Obviously greater procedural rigour should bring with it a greater immersion in a case, and consequently a more profound understanding of it. But the test is now whether the court's appreciation of the case is sufficient to rule on the merits fairly and justly without a trial, rather than the formal trial being the yardstick by which the requirements of fairness and justice are measured."

[40] 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 dry powder for another day and it is rather late in the process to sit down and ensure the issues are thoroughly understood.

2313103 Ontario Inc. et al. v. JMFood Services Ltd. et al., 2015 ONSC 4029, paras 39-40.

III. The Defence of non est factum (“it is not my deed”)

[21] The Court of Appeal for Ontario, at paragraphs 14 and 15 of its decision in The Guarantee Company of North America v. Ciro Excavating & Grading Ltd., 2016 ONCA 125, set out very succinctly what the defence of non est factum is all about.

[14] The motion judge accurately set out the test for non est factum from Marvco Color Research Ltd. v. Harris, [1982], 2 S.C.R. 774, and Bulut v. Carter, 2014 ONCA 424: “the defence of non est factum is available to someone who, as a result of misrepresentation, has signed a document mistaken as to its nature and character and who has not been careless in doing so.” There was no evidence of any misrepresentation. As the motion judge observed:

Stella’s own evidence established that she never read any documents presented to her; she never asked for a translation of any document; she took no steps to inform herself of what she was signing; she did not ask questions about the document; she never asked to speak to a lawyer or friend about the document; and she never took time to think about what she was signing.

[15] The absence of a misrepresentation and the appellant’s carelessness are fatal to her non est factum defence.

IV. The Legal Principles Applied

[22] First, I would like to thank Mr. Downs and Mr. Saverino.

[23] Unlike many motions for summary judgment in civil actions, this was not a trial in a box (or ten boxes). Nor was it an instance where the documents were filed on CaseLines in a way that traces a labyrinth, or in no way at all. Nor was it a case where counsel simply read from their facta or exceeded their time limits.

[24] Rather, these oral submissions were completed in about one-half of their advertised time, and we were done in about ninety minutes, total.

[25] It was refreshing. It can be done.

[26] In my view, this is an appropriate case to be decided on a motion for summary judgment. No credibility findings are necessary, as the result can be premised entirely on Julio’s version of events.

[27] The problem for Julio is the law, not the facts.

[28] The Defendants can point to only one authority for the proposition that the non est factum defence is available to Julio in these circumstances. That is, in a case where he was careless, which he most certainly was, and where the misrepresentation(s) about what he was signing and why he was signing came from someone other than the plaintiff (the innocent third party), and that single authority is the decision of the Supreme Court of Canada in Marvco Colour Research Ltd. v. Harris, [1982] 2 S.C.R. 774.

[29] In every other case relied upon by the Defendants, and unlike our facts, the misrepresentation(s) came from the plaintiff.

[30] Counsel for the Defendants took this Court to page 781 of the decision in Marvco, supra, and this passage: “if the party who executes an instrument in such circumstances has not been guilty of negligence in so doing, he may avoid it, not only against him who made the fraudulent misrepresentation, but as against a third party who has acted innocently, on the faith of the instrument being genuine”.

[31] That passage, however, does not assist Julio, for two reasons. First, it is a quotation from a 1909 textbook and not part of the ratio decidendi. Second, Julio was negligent.

[32] The first point is illustrated by looking at page 785 of the decision, where the Supreme Court of Canada states the following.

In my view, with all due respect to those who have expressed views to the contrary, the dissenting view of Cartwright J. (as he then was) in Prudential, supra, correctly enunciated the principles of the law of non est factum. In the result the defendants-respondents are barred by reason of their carelessness from pleading that their minds did not follow their hands when executing the mortgage so as to be able to plead that the mortgage is not binding upon them. The rationale of the rule is simple and clear. As between an innocent party (the appellant) and the respondents, the law must take into account the fact that the appellant was completely innocent of any negligence, carelessness or wrongdoing, whereas the respondents by their careless conduct have made it possible for the wrongdoers to inflict a loss. As between the appellant and the respondents, simple justice requires that the party, who by the application of reasonable care was in a position to avoid a loss to any of the parties, should bear any loss that results when the only alternative available to the courts would be to place the loss upon the innocent appellant. In the final analysis, therefore, the question raised cannot be put more aptly than in the words of Cartwright J. in Prudential, supra, at p. 929: “…which of two innocent parties is to suffer for the fraud of a third”. The two parties are innocent in the sense that they were not guilty of wrongdoing as against any other person, but as between the two innocent parties there remains a distinction significant in the law, namely that the respondents, by their carelessness, have exposed the innocent appellant to risk of loss, and even though no duty in law was owed by the respondents to the appellant to safeguard the appellant from such loss, nonetheless the law must take this discarded opportunity into account.

[33] That passage is the rationale for the decision.

[34] Julio is the innocent, but careless, party described in that passage. CWB is the other innocent, but also not careless, party described in that passage. The scale must tilt in favour of CWB.

[35] Which brings us to the second point. On his own evidence, Julio met a man, Jean, through an advertisement for truck drivers. Not long after meeting him for the very first time, Julio signed documents at the urging of Jean. Julio did not understand the documents. He did not read the documents because he was unable to read them. He did not ask for more time. He did not seek legal advice or advice from anyone. He did not request that the documents be translated. He did not ask to take the documents to someone who spoke Spanish. He did not ask to have someone who spoke Spanish come to where he was before signing. He made no enquiries of any kind, period.

[36] That, by any standard of measurement, is carelessness. It is, in fact, negligence.

[37] Julio cannot, in law, rely upon the defence of non est factum as against CWB.

[38] The other arguments advanced by Julio are also rejected by this Court.

[39] The allegation that CWB told Julio that his liability was extinguished upon his surrender of the truck was not pursued in oral submissions by counsel for the Defendants, but I will deal with it very briefly.

[40] It makes no sense in light of the plain wording of the surrender document itself, signed by Julio.

[41] But again, if we assume that everything Julio has said is true, it matters not because an enforceable contract depends upon consideration or some kind of quid pro quo. Lapointe Rosenstein Marchand Melancon LLP v. Cassels Brock & Blackwell LLP, 2016 SCC 30, at paragraph 40. There was none here. The surrender of the truck was automatic, per the lease agreement. CWB received nothing in exchange for its alleged promise to Julio to abandon any further claim against him.

[42] Similarly, the allegation that CWB sold the truck in a commercially unreasonable manner is not accepted by this Court.

[43] Even if is true that there was a firm sale agreement in place between CWB and Over the Road Transportation Inc. (“Over the Road”), the fact is that Over the Road failed or refused to pay the sales invoice rendered by CWB. What was CWB then supposed to do? I agree with Mr. Downs that CWB was not expected to commence a lawsuit against Over the Road and pursue that action through to its completion, which could take years, while the whole time recuperating not a cent on the clear breach of its lease agreement with the Defendants.

[44] Mitigation of damages, even assuming that it applies in this case despite CWB’s argument that it does not because we are dealing with liquidated damages, is a principle that depends on reasonableness. “The plaintiff is barred from recovering in respect of loss that could have been avoided by acting reasonably”; and “[i]n case of doubt, the plaintiff will usually receive the benefit, because it does not lie in the mouth of the defendant to be over-critical of good faith attempts by the plaintiff to avoid difficulty caused by the defendant’s wrong”. Professor S.M. Waddams, The Law of Damages, Looseleaf Edition, 2021 Thomson Reuters, at page 15-10.

[45] It would not have been reasonable for CWB to sue Over the Road on the alleged sale agreement instead of simply moving on to make its best efforts to sell the truck quickly but at a decent price, which is exactly what it did.

[46] Finally, the submissions that CWB caused unnecessary interest charges to be incurred by Julio and/or that CWB charged an unenforceable interest rate are also not accepted by this Court.

[47] As Justice Wein observed in Citi Cards v. Ross, 2014 ONSC 114, a case relied upon by the Defendants, at paragraphs 26 and 27, “absent exceptional circumstances, a creditor is entitled to recover both pre-judgment and post-judgment interest at the contract rate”, and “[e]xceptional circumstances that would cause a court to decline to apply a contractual interest rate must be more than just financial hardship for the borrower”.

[48] I see nothing exceptional here, at least as between CWB and the Defendants.

[49] Regarding the alleged delay in selling the truck, which delay the Defendants’ submit caused them to incur unnecessary interest charges, the chronology is important.

[50] The lease went into default in April 2017. Within three months, CWB had a signed surrender notice. By November 2017, CWB had brokered a potential deal to sell the truck to Over the Road. When that fell through, and not because of anything that CWB did or did not do, CWB moved with reasonable dispatch to find another potential buyer, Upper Canada Truck Sales (”Upper Canada”). When Upper Canada complained about the odd specifications of the truck and refused to pay anything more than $18,000.00, CWB went to the next best option, an auction, and sold the truck in January 2019 for a little more than what was offered previously.

[51] The truck, which had been in a bad accident and which had odd specifications, was sold within 21 months of the date of default.

[52] The repossession and sale process was imperfect but reasonable, in my view.

V. Disposition

[53] CWB’s motion for summary judgment is granted.

[54] On its claim against the Defendants, there is no genuine issue requiring a trial. Judgment is therefore granted in favour of CWB, as against both Defendants jointly and severally, as requested at paragraph 61 of CWB’s factum filed on the within motion for summary judgment, except that both the scale and the quantum of costs will be decided upon the receipt of written submissions filed by the parties.

[55] The Court has some sympathy for Julio. He was taken advantage of by Jean. Although there is no basis to stay the enforcement of the judgment pending a final disposition of the counterclaim, a request made in the Defendants’ factum but not pursued in oral argument, I might be persuaded to give Julio a break on costs, notwithstanding what the contract says.

[56] The parties should keep that in mind in their efforts to settle the issue of costs.

[57] If not settled, CWB shall file its submissions on costs within thirty (30) calendar days of the date of these reasons. The Defendants shall file within fifteen (15) calendar days after their counsel’s receipt of the Plaintiff’s submissions. There shall be no reply permitted. Each submission shall be strictly limited to three pages in length, excluding attachments.

Conlan J.

Released: November 23, 2022

COURT FILE NO.: CV-19-589

DATE: 20221123

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CWB National Leasing Inc.

Plaintiff

– and –

2536967 Ontario Ltd., and Julio Echeverria also known as Julio Cesar Echeverria

Defendants

REASONS FOR decision on motion

Conlan J.

Released: November 23, 2022