COURT FILE NO.: CV19-550 DATE: 20241125
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 2157313 Ontario Limited, Lynne Marie Hevey and JFM & Associates Inc., Plaintiffs AND: Wonderland Commercial Centre Inc., Devlon Corporation, Charles James Hevey, 737997 Ontario Limited and 922012 Ontario Limited, Defendants
BEFORE: Justice H.A. Rady
COUNSEL: Stuart MacKay, for the Plaintiffs Carolyn Brandow for the defendants Wonderland Commercial Centre Inc., et al. Scott Gallagher, for the Third Parties Ryan Hevey and Jeremy Hevey
HEARD: February 26, 2024
ENDORSEMENT
Introduction
[1] The plaintiffs, supported by the third parties, seek summary judgment on what they characterize as a straightforward debt collection. The defendants resist and submit first that there are genuine issues requiring a trial and second, that the moving parties are asking for partial summary judgment that will not dispose of the litigation. They also submit that there are limitation issues and suggest that they are entitled to summary judgment dismissing the claim on that basis.
[2] During the course of the hearing of the motion, the plaintiff Lynne Hevey abandoned certain of her claims, tacitly acknowledging that those claims might raise triable issues that would stand in the way of summary judgment.
[3] The material filed on the motion is voluminous. All of the non-corporate parties have sworn affidavits and supplementary affidavits, and they were cross-examined. Notably, there are no affidavits from any of the parties’ legal or accounting professionals. Much of the evidence is contradictory or in dispute. The third parties’ evidence reflects, in part, information Lynne Hevey relayed to them.
[4] The plaintiffs’ compendium consists of four volumes, containing hundreds of pages. The corporate structures involved and their organization are byzantine. There is an absence of or scant contemporaneous documentation respecting the alleged loans. The parties’ respective level of sophistication and business acumen are in issue. The subtext to the proceedings is the acrimonious breakdown of Lynne and James Hevey’s marriage, following their separation in the mid-2000’s. They have been involved in protracted litigation for many years since.
[5] While it is true that the claim involves a debt collection, I am not persuaded that it is one that is amenable to summary judgment and the motion must be dismissed for the reasons that follow.
The Parties
[6] The plaintiff Lynne Marie Hevey (Lynne) and the defendant Charles James Hevey (James) were married and are the parents of Ryan Charles Hevey (Ryan) and Jeremy James Hevey (Jeremy) who are the third parties. They separated in 2006 or 2007.
[7] James was a prominent land developer in London for a number of years. He now resides with his second family in Florida. James carried on business in London through a number of corporations, including those named as defendants in this action. In her affidavit dated August 12, 2020, Lynne describes her former husband no doubt pejoratively, as a developer “perfecting the art of prioritizing projects, manipulating money to deal with creditors and the CRA, and establishing elaborate corporate structures for the same purposes”.
[8] Lynne, Ryan and Jeremy were involved in some of the corporations from time-to-time. Ryan worked at Wonderland Commercial Centre Inc. (WCC) from approximately 2006 until 2019. Jeremy joined the companies in approximately 2005 and remained until 2014.
[9] Lynne worked as bookkeeper for Devlon Corporation (Devlon) until 2004 when her services were no longer required. She described her duties as having included overseeing accounts receivable and payable; completing staff payroll, completing HST, WSIB and EHT reports, reconciling bank statements, and compiling information relevant to the preparation of financial statements.
[10] Nevertheless, she deposes that she never had “full knowledge” of James’ true assets and business affairs, which she says were hidden from her.
[11] She resumed her bookkeeping duties in 2009 until 2019 and assisted from time to time, she says to protect her interests and those of her sons, particularly on the WCC project.
[12] According to James, Lynne had access to various corporate records. She used a record keeping program to which he says he and the corporate accountants did not have access.
[13] Lynne was a successful business woman in her own right and ran her family company L&H Smith Fruit Co. Limited (L&H Smith). She was the director and majority shareholder of the plaintiff 2157313 Ontario Limited. James says Lynne was known as “the Barracuda”, presumably a description, also pejorative, of her business style.
[14] Lynne’s mother, Audrey Smith was the majority shareholder and director of the plaintiff JFM & Associates Inc.
[15] James says his development companies were run as separate entities, each with its own financial statements and advances between corporations were treated and reported as loans. In contrast, Lynne, Ryan and Jeremy say that although the companies were legally distinct, they were treated interchangeably. Money was accumulated in one corporation and was dispersed to others as required.
[16] The defendant 737997 Ontario Limited (737) was involved in a development project in the 1980’s at Wonderland and Commissioners Roads in London. Another defendant, 922012 Ontario Limited (922), developed lands at Wonderland and Southdale Roads, which sold in 2012.
[17] The defendant WCC was incorporated in 2000 to acquire and develop land located at Wonderland Road North and Beaverbrook Avenue in London. Ryan was a director and secretary treasurer of WCC from September 30, 2006 to September 7, 2017. He became a signing officer on September 7, 2017 but his signing authority was removed on July 20, 2018 by director’s resolution. Jeremy became a director of WCC on September 30, 2006. He remains a director and is also president and secretary/treasurer.
The Family Trusts
[18] In 1986 and 1996, two family trusts were created – the Hevey Children’s Trust and the Hevey Family Trust. They were created for the benefit of Ryan and Jeremy (or for the Hevey family). Their purpose was apparently to protect the children and Lynne from the risks of James’ business. James was not a beneficiary.
[19] The family trusts were restructured and in 2006 and 2007, the JLJR Trust and PMP Trust were created. Lynne says she executed documents related to the JLJR Trust without legal advice.
[20] JLJR owned a Florida property in Lighthouse Point. Lynne deposes that the Florida property was to be a family vacation home. Lynne paid the deposit and guaranteed the mortgage when the property was purchased in May 2006. The couple’s separation followed. James began to reside there with his then girlfriend and ownership was eventually transferred from JLJR to him in January 2019.
[21] The plaintiffs say James caused PMP Trust to transfer its assets to three of his companies as a result of which James became the owner of PMP’s assets. The companies are:
(a) 1705815 Ontario Inc., which owns 100% of the following: Hevey Holding Inc., which in turns owns 100% of Gainsborough Place Inc., 722844 Ontario Ltd., Trillium Beach Estates Ltd., 837115 Ontario Ltd. and 776409 Ontario Ltd.;
(b) 1705817 Ontario Inc., which owns 100% of Develop Group Inc., WCC, Develop Corporation, and Tavoid Holdings Inc.; and
(c) 1705816 Ontario Inc., which owns 100% of 737977 Ontario Ltd. and 922012 Ontario Limited, which in turn owns 100% of 517 Fanshawe Ltd.
[22] James owns the common shares of each of the three companies. Ryan and Jeremy are officers and directors of the companies.
The Wonderland Project
[23] WCC purchased the Wonderland and Beaverbrook property with the intention to build a retail development. The property was developed in three phases and portions were leased to commercial tenants.
[24] Addenda Capital provided mortgage financing, including $2.9 million in 2009 and $4 million in 2014. By the terms of the mortgage, WCC was not permitted to obtain further financing. Apparently there was sufficient funding to meet the project’s development costs.
[25] WCC sold a portion of the property occupied by a Farm Boy grocery store to Manulife Property Portfolio in 2017. A further parcel was scheduled to be sold to Manulife in March 2019.
[26] Prior to the closing of the sale of the second property, the plaintiffs and Ryan indicated that they intended to bring an action against WCC and others for the repayment of loans. This would have interfered with the pending sale.
[27] In order to facilitate closing, the plaintiffs and Ryan and James agreed that an amount equal to that claimed in the action would be paid to their respective solicitors in trust and the balance held by James’ lawyers.
[28] The plaintiffs say $1,843,774.00 was to be paid to their lawyers but James transferred $95,000 to his American companies in breach of the agreement, an allegation that James denies. He asserts that the transfers were from accounts not covered by the settlement agreement. It is said he no longer has assets in Canada and the WCC project is the only way the plaintiffs and Ryan can recoup what they say is owing.
[29] Following the agreement, the parties wrangled over the payment of WCC debt to CRA, its lawyers, accountants and engineers. James brought an application seeking leave to commence a derivative action and interim relief, primarily related to bill payment. Ultimately, consent court orders were made over the course of 2020 and most of the outstanding accounts have now been paid.
[30] James says WCC incurred penalties and interest arising from the delay in payment. He also says that the plaintiffs have failed to produce relevant documentation and the failure to pay accountants prevented their timely review of records, the filing of income tax returns, and the preparation of financial statements. James deposes that they have been unable to determine whether WCC received any benefit from the alleged loans or intercompany transfers.
[31] He has filed a letter dated April 7, 2029 prepared by the accountant for the Hevey group of companies. The accountant concludes that $874,356 is estimated to be owing to the Lynne, Ryan and Jeremy group. He also says there are potential offsetting amounts reducing the amount owing to $214,755.
Audrey Smith Loan
[32] The plaintiffs allege that in the 1980’s, James approached Lynne’s parents Lloyd and Audrey Smith for a loan. Timely repayment is said to have been understood. They agreed to advance $650,000 with 8% interest through Lloyd’s Company, Lloyd K. Smith Holdings Ltd. to Devlon. They were granted security, the detail of which is not clear to me. Lloyd and Audrey separated in 1992 and the outstanding loan balance was divided equally between them. Lloyd K. Holdings Ltd. changed its name to JFM & Associates – Audrey’s company.
[33] Lloyd’s portion of the loan was retired but the plaintiffs say James persuaded Audrey to leave her money ($325,000) in the project (the detail of and basis on which is also unclear to me). However, it appears that Audrey’s mortgage security was released upon Lloyd’s repayment. It is alleged that James convinced Audrey that she should permit the loan to be unsecured to avoid adverse consequences for the project. Simple interest only payments were made until 2010. The plaintiffs say the defendants have acknowledged both the loan and the repayment obligation. The sum of $654,275.04 is said to be outstanding as of the time this claim was commenced, which includes compound interest.
Lynne Hevey’s Loans
[34] Lynne says she has advanced over $6 million to various corporate entities over the years. She alleges that $1,189,498.96 has been acknowledged by the defendants to be owing. She also alleges that James persuaded her that her loans should also be unsecured to avoid interfering with other projects’ financing and that he repeatedly represented that her loans would be repaid from various family projects including WCC.
[35] By way of example, she attaches an email from James to her, copied to Jeremy dated November 10, 2011 in which he says “As I promised this morning we have a pending deal…I will ask the boys to pay you back $300,000 for this sale plus the $100,000 we are asking for how…The balance of any advances you have made will be completed on the Sobeys transaction.”
[36] Lynne has appended to her affidavit copies of her personal and corporate bank statements as well as general ledger entries from records of some of the corporate defendants. Unfortunately, the records are excerpts only and while they do show what are described as loans to some of the defendants over time, the records are not complete. They also show what appear to be loan repayments from time to time.
[37] Lynne has also advanced a claim for accounting services she provided from 2018 and 2019 totalling $23,504.00, and for “unsettled currency exchange” totalling $108,901.71. At the conclusion of argument at the hearing, she was willing to abandon those claims in the event the court granted summary judgment on the alleged loan. The plaintiffs also seek punitive damages, a claim they are also willing to forego in the event summary judgment is granted on the loan debts.
The Acknowledgments
[38] Leaving aside the oral representations that James is alleged to have made, the plaintiffs rely on a series of acknowledgments. The first is dated February 13, 2019 from 737997 and JFM & Associates Inc. addressed “To Whom It May Concern”. Ryan signed it on behalf of 737997 as Secretary Treasurer. Lynne signed on behalf of JFM & Associates Inc. It provides as follows:
We hereby acknowledge that the sum of money advanced by J.F.M. & Associates Inc. to 737997 Ontario Limited for use by James Hevey for his various commercial projects that remains outstanding is the sum of $325,000.00 together with accrued interest agreed upon and calculated at Eight (8) % per annum.
We hereby acknowledge that James Hevey had agreed that these monies would be repaid from the proceeds of the sale of the Wonderland Commercial Plaza (located at Wonderland Road & Beaverbrook Avenue, London, Ontario), owned by Wonderland Commercial Centre Inc.
[39] The second, also dated February 13, 2019, is from Lynne and 2157313 addressed To Whom it may concern. It provides as follows:
We hereby acknowledge that the sum of money advanced by Lynne Hevey (through her Corporation L&H Smith Fruit Company Ltd.) and her Corporation 2157313 Ontario Ltd. to Devlon Corporation and Wonderland Commercial Centre Inc. for use by James Hevey for his various commercial projects. Including the Wonderland Commercial Centre, that remains outstanding is the sum of $1,080,597.25. A summary of these monies is attached hereto as Schedule A.
We hereby further acknowledge that James Hevey had agreed that these monies would be repaid from the proceeds of the sale of the Wonderland Commercial Plaza (located at Wonderland Road & Beaverbrook Avenue, London, Ontario), owned by Wonderland Commercial Centre Inc.
[40] Schedule A contains General Ledger entries of LH Smith from January, 2010 through December 21, 2013, with an opening balance of $220,000. It shows payments made for Devlon invoices and transfers to Devlon. There are transfers to 922012 and for “GPI” and one to WCC for $40,000. A balance is shown to be outstanding on December 31, 2013 of $1,080,597.25.
[41] I was not referred to any of the supporting source documents. I also note that there are a number of credit entries for funds paid by Devlon to L&H Smith.
[42] It is signed by Lynne personally and as president of 2157313, by Jeremy and Ryan as president and secretary of Devlon respectively and by Jeremy as president of WCC.
[43] A third acknowledgement dated March 10, 2019, is also addressed To Whom It May Concern. It is signed by Lynne personally and as president of 2157313. It is signed on behalf Jeremy and Ryan as president and secretary respectively of Devlon and by Jeremy on behalf of WCC as president. It provides as follows:
We hereby acknowledge that in addition to the moneys owed to Lynne Hevey through her corporation 215313 Ontario Ltd, as set out in the Acknowledgement dated the 13 th day of February 2019 (a copy of which is attached hereto as Schedule A), 2157313 Ontario Ltd. is also owed the sum of $108,901.71 as confirmed in a letter dated May 14 th 2009, a copy of which is attached hereto as Schedule B.
As a result of the forgoing, the total amount owing to Lynne Hevey through her corporation, 2157313 Ontario Ltd. is the sum of $1,189,498.96 which is to be repaid from the proceeds of the sale of the Wonderland Commercial Plaza (located at Wonderland Road & Beaverbrook Avenue, London, Ontario) owned by Wonderland Commercial Centre Inc.
[44] Schedule B is a letter on Devlon letterhead dated May 14, 2009. It is signed by Lynne on behalf of L&H Smith and Jeremy on behalf of Devlon. It states that the parties are agreed that Devlon owes L&H Smith $108,901.71 for unsettled currency exchange.
[45] On February 22, 2019, Jeremy signed a letter on behalf of WCC addressed to plaintiffs’ counsel retracting the second Acknowledgement of February 13, 2019, on the basis that he signed it recklessly and in breach of his fiduciary duty to WCC. In particular, he stated:
I executed the Acknowledgement without any investigation and in so doing I have compromised my fiduciary duty to Wonderland Commercial Centre Inc. (“WCC”).
By executing the Acknowledgement, I recklessly confirmed that Lynne Hevey, through her corporation L&H Smith Fruit Company Ltd. and 2157313 Ontario Ltd. loaned the sum of $1,080,597.25 to Devlon Corporation (“Devlon”) and WCC for use by James Hevey. This statement is not accurate. Lynne Hevey, through her corporations L&H Smith Fruit Company Ltd. and 2157313 Ontario Ltd., loaned money to Devlon not WCC. The quantum of the loan advance is not supported by the entries attached to the Acknowledgement as Schedule “A”. I did not take any steps to verify the quantum in the Acknowledgement. I did no investigation with respect to the quantum of the Acknowledgement.
By executing the Acknowledgement, I recklessly confirmed that the money advanced by Lynne Hevey, through her corporation L&H Smith Fruit Company Ltd. and 2157313 Ontario Ltd., was utilized by James Hevey for various commercial projects including the Wonderland Commercial Centre located at the intersection of Wonderland Road and Beaverbrook Avenue, London, Ontario (the “Wonderland Plaza”). This statement is also not accurate. The monies advanced by Lynne Hevey through L&H Smith Fruit Company Ltd. and 2157313 Ontario Ltd. were utilized by James Hevey for many items including Devlon payroll, CRA payments, property taxes, trades etc. I have no evidence or recollection of James Hevey utilizing the money advanced to Devlon for the Wonderland Commercial Centre or Wonderland Plaza.
By executing the Acknowledgement, I recklessly confirmed that James Hevey agreed that monies would be repaid from the proceeds of the sale of the Wonderland Plaza. This statement is also not accurate. James Hevey agreed that L&H Smith Fruit Company Ltd. and 2157313 Ontario Ltd. would be repaid from the sale of the Wonderland Plaza but James Hevey did not execute an agreement and there were no terms agreed upon with respect to repayment.
[46] However, on March 9, 2019, Jeremy swore a Statutory Declaration swearing that he signed the February 22, 2019 letter under pressure from James. He deposed as follows:
I make this declaration in response to correspondence dated February 22, 2019 forwarded by myself to McKenzie Lake Lawyers, a copy of which is attached hereto as Exhibit “A”.
I executed the letter under pressure from my father James Hevey who I understand had directed Bill Mitches of Harrison Pensa to provide it to me for my signature purposes.
I hereby confirm that the contents of the letter are inaccurate.
I have now had the opportunity to review the financial records of Devlon Corporation (“Devlon”) and Wonderland Commercial Centre Inc. (“WCC”) and can confirm that between October 1, 2008 and September 30, 2014, the sum of $1,059,166.69 was transferred from Devlon to WCC to support its operations. A summary of these advances are attached hereto as Exhibit “B”.
I hereby further confirm that the Acknowledgements that I had provided earlier to McKenzie Lake Lawyers, copies of which are attached here to as Exhibits “C” & “D” respectively are true in all aspects.
I hereby further confirm once again that James Hevey had repeatedly agreed that L&H Smith Fruit Company Ltd. (or its Assignee) and 2157313 Ontario Ltd. would be repaid in full all the monies owed to them from the proceeds of the sale of the Wonderland Commercial Centre Plaza.
[47] Exhibit B to the Affidavit are General Ledger entries for Devlon which show loans and transfers to WCC between October 1, 2009 and December 31, 2013, with an opening balance of $374,024.28. There are loans from WCC to Devlon as well. There is also an entry on January 16, 2013 referring to the assignment of lien file totalling $369,519.37. There is no detail respecting these entries.
[48] James submits that the Acknowledgements were signed after this litigation arose and neither Ryan, Jeremy nor Lynne had signing authority when the documents were signed. His material contains an email from him dated July 18, 2018 addressed to Jeremy and Lynne and copied to Ryan stating as follows:
As of this email I now require ALL WCCI Checks to be signed by me alone. No TRANSFER or WITHDRAWS of any funds will be done without my written permission. No contracts or Corporate documents with (sic) be signed without my written permission.
All Corporate business will now require my authorization in writing.
[49] I also note that the material contains an Assignment dated January 1, 2014, between L&H Smith as assignor and 2157313 as Assignee signed by the president of L&H Smith (whose signature is illegible) and Lynne as president of 2157313. It purports to assign a debt owing to the assignor by Devlon of $1,189,498.96 (the same figure used in the subsequent Acknowledgement of March 10, 2019) to the assignee. How this squares with the plaintiffs’ contention that WCC is responsible for the debt is not clear.
The Parties’ Positions
[50] The plaintiffs submit that there is no genuine issue requiring a trial. The plaintiffs’ position is summarized in its factum, which is paraphrased as follows:
The Plaintiffs advanced monies to the Defendants to address cash flow issues in the development of a number of the Hevey family’s commercial endeavours. The Plaintiffs assert that they expected their loans to be repaid, and they have yet to be reimbursed. James personally and on behalf of the Defendant corporations, represented to the Plaintiffs that their loans could not be secured against properties owned by the Hevey family corporations, because it would interfere with the financing of the family. James promised that the loans would be repaid, and on the basis of these representations, the Plaintiffs allowed the loans to remain unsecured.
The Plaintiffs, and in particular, Lynne and her corporation, nevertheless continued to loan money because James would threaten that unless cash flow monies were advanced to him, the projects he was carrying on would collapse, the companies involved would go bankrupt, and their sons, Ryan and Jeremy, as directors of the corporations, would suffer the financial consequences.
The Defendants have acknowledged the outstanding debt on numerous occasions, and, over the years, continued to represent to the Plaintiffs that they would be paid out whenever the next project was to close. The Plaintiffs relied upon the Defendants' promises that these loans would be repaid using the proceeds of sale from a number of developed properties; however, the Plaintiffs were never repaid for monies advanced.
James improperly divested the Family Corporations of their assets by diverting money, in excess of $15,000,000.00 to his corporations in the United States of America.
Consistent with his representations, James promised that these loans would be repaid using the proceeds of sale from WCC, which was the last project associated with the Family Corporations, the Wonderland Project, but as the closing date approached, James expressly told Lynne, Ryan and Jeremy that he had no intention of having WCC repay the Plaintiffs’ loans.
[51] Turning to the defendants’ position, they seem to acknowledge that some money is owing but submit that this is not a simple case of repayment of a debt that would be amenable to summary judgment. The plaintiffs have provided no documentation as to what was loaned, by whom, and on what terms. They say the above described acknowledgments are not valid. They also submit that there are limitation issues. Finally, they point out that summary judgment will not dispose of the litigation because there is a third party claim against Ryan and Jeremy.
[52] They also submit that there are genuine issues for trial, including the quantum owed, to which companies loans were made, whether WCC is liable to repay, and if James is personally responsible.
The Law Respecting Summary Judgment
[53] The principles governing Rule 20 are well established. Given their importance to the disposition of this motion, I set out my appreciation of those principles here.
[54] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that “[t]he court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.”
[55] Rule 20.04(2.1) lists the court’s powers on a motion for summary judgment:
In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
- Weighing the evidence.
- Evaluating the credibility of a deponent.
- Drawing any reasonable inference from the evidence.
[56] In Hryniak v. Mauldin, 2014 SCC 7, the Supreme Court of Canada had occasion to outline at para. 66 a two-part framework to guide judges hearing motions for summary judgment:
On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the 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.
[57] However, even with these expanded powers, summary judgment is appropriate only if the material filed on the motion “gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute”: Hryniak, at para. 50.
[58] It is well settled that “both parties on a summary judgment motion have an obligation to put their best foot forward”: Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9. Given the onus placed on the moving party to provide supporting affidavit or other evidence under Rule 20.01, “it is not just the responding party who has an obligation to ‘lead trump or risk losing’”: See Ipex Inc. v. Lubrizol Advanced Materials Canada, 2015 ONSC 6580, at para. 28.
Analysis
[59] The plaintiffs have made a valiant attempt to persuade me that their claim is a simple and straightforward one, for which summary judgment can readily be granted. They submit that James’ evidence is not credible, he is untruthful and he should not be believed.
[60] I have concluded that there are genuine issues that stand solidly in the way of summary judgment.
[61] It is probably fair to say that the parties were very casual in their financial dealings with one another, which is probably not unusual in situations like this one when family members are involved in what is essentially a family business.
[62] I do not believe that Lynne is as unsophisticated as she suggests. She appears to have been a successful business woman with substantial assets of her own. It seems to me that the parties may have ordered their financial affairs to their satisfaction and for their mutual benefit while their marriage was intact.
[63] There is a lack of clear evidence regarding how much the plaintiffs loaned, to whom, who was obligated to repay and what was repaid. The claim’s success is predicated on establishing that WCC is responsible for repayment because it appears to be the only entity with remaining assets. The strength of that outcome depends on establishing that James made representations to the plaintiffs, which in turn raises triable issues the resolution of which is almost entirely dependent on findings of credibility. In addition, there is an issue about whether James is personally liable or whether WCC is responsible for debt incurred by other corporations (absent an agreement). The circumstances in which the Acknowledgments were signed are also self-evidently unusual.
[64] As already noted, there is no first hand evidence from the legal and accounting professionals retained by the parties. There is no affidavit evidence from Lynne’s mother. I would have thought they would have relevant evidence that might shed light on the issues.
[65] The Acknowledgments are problematic. They were executed at a time that litigation was being contemplated and after James had communicated that no contracts could be signed on behalf of WCC without his authorization. Further, Jeremy wrote a letter to plaintiffs’ counsel saying he had executed the Acknowledgement recklessly and did not verify the amount said to be outstanding. And yet, two weeks later he signed a statutory declaration deposing that the letter was inaccurate and was signed under pressure. In the circumstances, I cannot be certain on the strength of this evidentiary record that the Acknowledgments are valid and accurate.
[66] There are also limitation issues whether the claims or some parts of them are statute barred. Just as the claim is unsuitable for summary judgment, so too are the limitation issues given the underlying factual dispute. It is not even clear which Limitation Act might apply, the 2002 version or its predecessor.
[67] Finally, summary judgment will not dispose of the litigation in its entirety given the existence of third party proceedings. The Court of Appeal has repeatedly cautioned motion judges most recently in Passmore v. Hamilton (City), 2024 ONCA 825 that granting partial summary judgment can be unwise because of the risk of inconsistent findings. In that decision, the Court referred to its decision in Malik v. Attia, 2020 ONCA 787, which set out three considerations that support granting partial summary judgment:
- The determination of the case in several parts will prove cheaper for the parties;
- Partial summary judgment will get the parties’ case in and out of the court system more quickly; and
- Partial summary judgment will not result in inconsistent findings by the multiple judges who will touch the divided case.
[68] I am not persuaded that any of these factors are satisfied.
[69] Nor is this claim amenable to the use of the expanded powers conferred on a motion for summary judgment pursuant to Rule 20.04(2.1). There are simply too many substantial issues including credibility that can be properly, efficiently and summarily canvassed in a “mini-trial”.
[70] The motion is dismissed. The parties may forward brief written submissions on costs, not exceeding five pages, together with Bills of Costs, within 30 days of the release of this decision.
“Justice H.A. Rady” Justice H.A. Rady
Date: November 25, 2024