Court File and Parties

COURT FILE NO.: 155/22 (Milton) DATE: 2024 01 26

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: THE BANK OF NOVA SCOTIA, Plaintiff - and - DANILO MILOSEVIC and DUSICA MILOSEVIC also known as DUSICK MIKOSEVIC also known as DUSICA GRABOVICA, Defendants

BEFORE: Associate Justice Todd Robinson

APPEARING: R. Aisenberg, for the plaintiff (moving party) D. Milosevic, in person T. McLean, for the defendant, Dusica Milosevic a.k.a. Dusica Grabovica

HEARD: July 26, 2023 (by videoconference)

REASONS FOR DECISION (Motion for Summary Judgment)

[1] The Bank of Nova Scotia (“BNS”) seeks summary judgment against the defendants, Danilo Milosevic and Dusica Grabovica, who are former spouses, on an alleged debt arising from a line of credit held jointly in their names. The motion is opposed by both defendants.

[2] Ms. Grabovica’s liability, if any, is to be determined following oral evidence addressing the authenticity of her signature on the credit agreement, which has been ordered to proceed by way of one-day mini-trial to be scheduled by the parties. The balance of the motion dealing with Mr. Milosevic’s liability was argued before me. My decision on that portion of the motion has been unfortunately delayed through no fault of the parties.

[3] Having considered the submissions on behalf of BNS and by Mr. Milosevic himself, I find no genuine issue requiring a trial regarding Mr. Milosevic’s liability to BNS. However, I find a genuine issue for trial regarding the accounting of the debt owing under the line of credit, specifically the applicable interest rate and calculation of accrued interest. In my view, that outstanding issue is appropriately dealt with by way of a trial of the issue. I am thereby directing that trial to occur concurrently with the mini trial already ordered, unless otherwise directed by the trial office and subject to the discretion of the trial judge.

Analysis

[4] Subrule 20.04(2)(a) of the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”) provides that summary judgment is to be granted where the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or a defence. There will be no genuine issue requiring a trial if I am able to reach a fair and just determination on the merits based on the record before me. That will be the case where this process allows me to make the necessary findings of fact, allows me to apply the law to the facts, and is a proportionate, more expeditious, and less expensive means to achieve a just result: Hryniak v. Mauldin, 2014 SCC 7 at para. 49.

[5] BNS has the onus of showing that there is no genuine issue requiring a trial. If it meets that burden, then the onus shifts to Mr. Milosevic to demonstrate a real chance of success in his defences at trial: Guarantee Co. of North of America v. Gordon Capital Corp., [1999] 3 SCR 423 at para. 27.

[6] Both parties have a “best foot forward” evidentiary obligation on a summary judgment motion. I am entitled to assume that the parties have placed before me, in some form, all of the evidence that will be available for trial: Sweda Farms v. Egg Farmers of Ontario, [2014] ONSC 1200 at paras. 32 and 33 (aff’d 2014 ONCA 878). Although the evidence need not be equivalent to that at trial, there must be sufficient evidence to give me confidence that I can fairly resolve the dispute: Hryniak v. Mauldin, supra at para. 57.

[7] I am satisfied that BNS has met its onus with respect to Mr. Milosevic’s liability to BNS, regardless of the outcome of the claim against Dusica Grabovica. A trial on that issue is not required. However, I am not satisfied that the calculation of debt owing on the line of credit, including accruing interest, is sufficiently addressed by the materials to be fairly resolved on the record before me.

[8] BNS seeks judgment in the amount of $52,234.97. That amount is comprised of unpaid principal and interest calculated to the date of the motion hearing based on the amount owing under the line of credit being $44,414.49 as of December 24, 2021. Interest at the rate of 11.10% per annum has been applied from that date to the date of this hearing.

[9] Mr. Milosevic admits to signing the “Personal Credit Agreement” with BNS for a personal line of credit of $65,000. The record amply supports that the line of credit was used and that, by January 2021, the line of credit was in continuous default. Based on the record before me, between January 2021 and this motion being heard, the only payment made was an amount of $21,250 in November 2021, which was made by Mr. Milosevic.

[10] Mr. Milosevic argues that I should given effect to a purported settlement agreement reached with BNS in November 2021. BNS had offered, by its lawyers, to settle the debt on payment of $42,500 in two installments of $21,250. Mr. Milosevic submits that he had been assured that if he paid $21,250 himself, then the balance would be pursued solely against Ms. Grabovica. Mr. Milosevic says that he agreed to the settlement, then borrowed and paid the $21,250.

[11] There is no evidence supporting Mr. Milosevic’s assertion that he was assured he would only have to pay half the settlement amount. It is not discussed in his affidavit or in the offer letter. The offer letter clearly sets out an offer to settle on payment of $42,500 in two installments. It says nothing about Mr. Milosevic being responsible to pay only one of them. To the contrary, it expressly states the following:

Should we not be in receipt of any of the payments as noted above, this settlement will be null and void and our client will have the option to proceed with legal action against for the full remaining balance owing on the debt without regard to the settlement herein.

[12] Based on the record before me, I find no genuine issue requiring a trial on whether a settlement was reached and complied with by Mr. Milosevic. The evidence before me supports only partial compliance with BNS’ offer to settle. The offered settlement terms were not completed. I find that BNS was entitled to apply the payment received from Mr. Milosevic and pursue this action against both defendants, as it has done.

[13] I turn now to whether there is any genuine issue for trial on Mr. Milosevic’s liability to BNS for the full amount of the claimed debt.

[14] Mr. Milosevic’s primary defence to joint liability for the full amount claimed by BNS is essentially that Ms. Grabovica should be responsible for half of the debt as a co-borrower. Mr. Milosevic argues that it would be unfair to find him liable for the full amount, since the line of credit was taken out by both of the defendants. Mr. Milosevic’s evidence is that both defendants used the line of credit. His affidavit outlines that, when Mr. Milosevic and Ms. Grabovica separated, Ms. Grabovica expressly sought to have him take over the debt under the joint line of credit in their family law proceedings. He points to an affidavit sworn by Ms. Grabovica in those proceedings discussing the line of credit. Mr. Milosevic argues that he made payments throughout and made the $21,250 payment, such that he has paid his proportionate share of the joint debt and should have no further liability.

[15] I find no genuine issue requiring a trial in these arguments. Mr. Milosevic admits to signing the credit agreement and the record amply supports a breach of contract by ongoing default under the terms of the credit agreement, namely failing to make the required monthly payments. The terms do not support several liability of Mr. Milosevic for only his proportionate share of debt under the line of credit. To the contrary, liability is expressly joint and several as between Mr. Milosevic and Ms. Grabovica.

[16] BNS has put forward the personal credit agreement companion booklet, which is specifically referenced in the credit agreement. Apart from the grammatical meaning of the term “co-borrower”, section 2.01(b) of that companion booklet supports that the defendants agreed to be and are jointly and severally liable for the debt. It states, in part, as follows:

If more than one person enters into the Agreement for a Credit Product, any Security Agreement and any guarantee, the obligations set out in the Agreement, any Security Agreement and any guarantee are joint and separate (this is known as joint and several liability, or solidary liability in Quebec) This means each of you is fully responsible for complying with all obligations in the Agreement, any Security Agreement and any guarantee and for the entire Debt.

[17] Mr. Milosevic has not advanced a crossclaim against Ms. Grabovica. Accordingly, whether or not Ms. Grabovica has any liability to Ms. Milosevic if he has paid or does pay more than half of the total debt is not before me on this motion. I am concerned only with whether there is any genuine issue requiring a trial in Mr. Milosevic’s argument that each of the defendants should be held only severally liable to BNS for half the debt. Given the express joint and several language, it does not. I find that there is no genuine issue requiring a trial that BNS is entitled to seek judgment for the full amount of the debt against Mr. Milosevic.

[18] BNS submits that there does not appear to be any dispute on the amount of the debt. Indeed, Mr. Milosevic has not challenged any of the withdrawals and cash advances shown on the monthly line of credit statements (although argues he did not receive those statements, despite that position not being pleaded or addressed in his affidavit). However, Mr. Milosevic submits that the interest amounts charged by BNS, notably the 11.10% interest claimed at the time of the hearing, were never agreed and are not consistent with the signed credit agreement.

[19] The credit agreement sets out that the interest rate payable on the line of credit is 5.1% per annum. That rate is described in the credit agreement as the “Annual or Initial Annual Rate”. It is comprised of BNS’ prime rate at the time of 3.00% plus an “Adjustment Factor” of 2.10%. Section 2.01(b) of the personal credit agreement companion booklet, which deals with interest, sets out only that interest is charged at the rates and in the manner set out in the applicable agreement.

[20] BNS submits that it was entitled to change the adjustment factor, provided that it was done on notice to the defendants. It relies on a term in the personal credit agreement companion booklet, which states that BNS may change the interest rates from time to time at its discretion. That term, though, also stipulates that such changes are “as permitted by applicable law and the Agreement.” No law on the issue was put before me and I was directed to no term of the credit agreement expressly permitting variation of the interest rate.

[21] BNS’ supporting affidavits on the motion were sworn by Kimberly Kosovski, the manager of “Agency Management” for BNS, and Puja Arya, the financial advisor (now branch manager) who dealt with the defendants when the line of credit was opened. Neither of the two affidavits deals expressly with calculation of the debt or the interest rates charged.

[22] Ms. Kosovski’s affidavit is the only evidence from BNS on the quantum of debt. It appends the monthly statements issued by BNS. Ms. Kosovski’s evidence about default under the credit agreement is based on them. She states generally that the monthly statements “outlined the important terms and conditions associated with Line of Credit [sic] as well as the applicable interest rate.” The affidavit does not address how the interest rates were determined and how the accrued interest was calculated.

[23] BNS argues that the rates are based on its prime rate in effect from time to time, which are reflected in the statements. Current interest rates are listed on each statement, as well as notes about when BNS’ prime rate changed and the percentage increase or decrease. However, in my view, there is a genuine issue requiring a trial on whether the stated rates are consistent with the terms of the credit agreement. As noted above, the credit agreement provides that interest is chargeable at BNS’ prime rate at the time of the agreement of 3.00% plus an “Adjustment Factor” of 2.10%. There is no clear correlation in the record before me between that original stated interest rate and the varying rates listed on the monthly statements.

[24] BNS submits that Mr. Milosevic did not challenge the rates at any time, including in his responding materials. Mr. Milosevic correctly points out that he did challenge the interest in his statement of defence. Specifically, at para. 11, Mr. Milosevic expressly pleads that “the interest rate of 11.10% charged by the plaintiff is excessive and inconsistent with the terms of the agreement.” He further pleads that he “is unaware of how the interest amount was calculated.”

[25] BNS argues that Mr. Milosevic was given clear notice of the interest rate changes in the monthly statements. BNS submits that, had Mr. Milosevic raised the position on interest in his responding materials, then BNS would have known that interest was an issue on this motion and would have put forward case law on acquiescence. In my view, that is not an answer to the challenge raised by Mr. Milosevic.

[26] BNS’ evidentiary onus on this motion is to demonstrate that there are no genuine issues requiring a trial. Mr. Milosevic’s statement of defence put the validity of the interest rates and amounts charged squarely in issue. BNS has moved for summary judgment and, in doing so, has not directly addressed that challenge raised by Mr. Milosevic in his pleaded defence. In my view, the fact that Mr. Milosevic did not specifically address interest in his responding affidavit is immaterial. Issues in an action are framed by the pleadings, not responding motion materials.

[27] The evidentiary gap on the interest rate in effect and, thereby, the calculation of interest each month is problematic on this motion. The debt is a blend of unpaid principal and accrued interest. To find no genuine issue for trial on the quantum of debt, I must be satisfied that the record supports the calculation of unpaid principal and accrued interest. I am not.

[28] BNS’ requested judgment amount is based on the debt being $44,414.49 as of December 24, 2021. However, that figure incorporates accrued interest both prior to and following the payment made in November 2021. I was directed to nothing in the record distinguishing principal debt from accruing or accrued interest, including both before and after Mr. Milosevic’s last payment. There is also no evidence on BNS’ prime rates in effect at the material times.

[29] Significantly, I have not been provided with any statement or calculation that clearly sets out the principal debt, the total amount of interest accrued, the amounts on which interest has been charged, at what rates interest was calculated, and how the November 2021 payment was applied. In my view, BNS’ monthly statements do not provide a sufficiently clear calculation of the monthly interest charges. Even if they did, verifying BNS’ figures would require me to perform calculations that BNS ought readily to be able to perform itself and provide to the court in a more accessible format.

[30] In the face of a pleaded challenge to the interest charged and calculation of the judgment amount, which has been specifically argued by Mr. Milosevic in response to BNS’ motion, I find that BNS has tendered insufficient evidence on whether the interest rates charged, as reflected in the monthly statements, were properly charged in accordance with the credit agreement. In my view, the enhanced powers under subrule 20.04(2.1) would not assist in resolving the issue, even if they were available to me.

[31] For these reasons, I find a genuine issue requiring a trial on the amount of judgment to which BNS is entitled.

[32] Subrule 20.04(3) of the Rules provides that, where the court is satisfied that the only genuine issue is the amount to which the moving party is entitled, the court may order a trial of that issue. In my view, it is appropriate that the applicable interest rate(s) and quantifying the remaining debt owing (including accrued interest on the debt prior to and after the November 2021 payment) be addressed by trial of that issue. That trial would preferably be heard by the same judge hearing the mini trial, assuming that has not already been booked and heard.

Costs

[33] The parties made submissions on costs at the hearing. However, given the result, fixing costs of the motion at this stage seems premature. BNS has established its entitlement to judgment against Mr. Milosevic, but the amount of that judgment remains to be fixed. BNS’ success cannot meaningfully be assessed until that remaining dispute is decided.

[34] Also, given the agreement by BNS and Ms. Grabovica to conduct a mini trial as part of BNS’s motion against her, dealing with costs of this piece of BNS’ motion apart from the portion dealing with Ms. Grabovica will result in a bifurcated approach to costs. The motion deals with both defendants and only part of the motion has proceeded and been determined before me. The remaining issues in this litigation will be decided following oral evidence dealing with both defendants.

[35] In these circumstances, costs of this motion are appropriately reserved to the trial judge. If the trial judge determines that it is more appropriate for me to decide costs of those portions of this motion argued before me, then that piece may be remitted back to me.

Disposition

[36] For the above reasons, I order as follows:

(a) Summary judgment is hereby granted against Mr. Milosevic in an amount to be determined at a trial of that issue.

(b) Evidence from this motion shall stand as evidence for trial. The parties shall be entitled to tender limited supplementary oral evidence on the calculation and interest issues not exceeding ninety (90) minutes per party with brief cross-examination not exceeding fifteen (15) minutes per witness, subject to the discretion of the trial judge to abridge those limits or grant additional time.

(c) Costs of the motion are reserved to the trial judge.

(d) This order is effective without further formality.

ASSOCIATE JUSTICE TODD ROBINSON DATE: January 26, 2024