Court File and Parties

Court File No.: CV-24-00728268-0000 Date: 2025-08-11 Superior Court of Justice – Ontario

Re: Admore Capital Group GP Inc. Plaintiff

And: Ludwik Hajduk and Elzbieta Marie Hajduk Defendants

And Between: Ludwik Hajduk and Elzbieta Marie Hajduk Plaintiffs by Counterclaim

And: Admore Capital Group GP Inc., Geoffrey Carnevale, Jacek Hajduk, also known as Jack Hajduk, Maryam Nazar, also known as Miriam Nazar, Mahmoud Nazar, Peter Gordon Dale, Chris John Whelehan, CJW Legal, Chris J. Whelehan Conveyancing, Robert Max Isles and Howard Floyd Manis Defendants to the Counterclaim

Before: Koehnen J.

Counsel:

• Daniel Milton, Mark Ross, and Lauren Grammer, for the moving party, Admore Capital Group Inc.
• Michael Kestenberg, for the moving party, Howard Manis
• Alfred Esterbauer, for the moving party, Peter Gordon Dale
• Jordan Goldblatt, for the defendant by counterclaim, Robert Max Isles
• Pooneh Sooresrafil, for the defendants, Ludwik Hajduk and Elzbieta Marie Hajduk

Heard: July 29, 2025

Endorsement

Introduction

[1] The plaintiff, Admore Capital Group GP Inc. ("Admore"), brings a motion for summary judgment against the defendants Ludwik Hajduk and Elzbieta Marie Hajduk pursuant to a collateral mortgage which they registered on their home in favour of Admore. Because of the common surname among the Hajduk family members involved in this case, I will refer to them by their first names. I mean no disrespect in doing so.

[2] Ludwik and Elzbieta have counterclaimed against a number of parties, including their son Jack Hajduk, their daughter-in-law Maryam Nazar, Admore, Robert Isles, Howard Manis, and Peter Dale. The latter two have also brought motions for summary judgment to dismiss the action against them.

[3] For the reasons set out below I dismiss the motions for summary judgment of Admore and Howard Manis but grant the motion of Peter Dale.

[4] The collateral mortgage gives rise to issues of undue influence and unconscionability. The collateral mortgage was one that allowed Admore to escape the virtual certainty of a deficiency on the sale of the principal property from which Jack and his family had been evicted in mortgage enforcement proceedings. In exchange for the collateral mortgage on Ludwik's and Elzbieta's unencumbered home, Jack was allowed to re-enter the underlying property for six months to refinance or sell it; something Jack had been unable to do in the 21 months between his default on the principal mortgage and his eviction. Admore relies on a certificate of independent legal advice that Jack and Elzbieta received. As set out in greater detail below, this case gives rise to genuine issues that require a trial to resolve about the inter-relationship between undue influence, unconscionability and independent legal advice. By way of example, the virtual certainty of further enforcement on the underlying property is something a lawyer giving independent legal advice may well want to know. Admore's knowledge of those facts and whether they disclosed them to Ludwik, Elzbieta or the lawyer providing independent legal advice are not disclosed in the record before the court on this motion.

[5] Mr. Manis was Jack's lawyer. He had a direct conversation with Elzbieta from which she says she took comfort and reassurance. There are competing versions of that conversation and genuine issues about how the conversation arose and what occurred during the conversation that require a trial to resolve.

[6] Mr. Dale's motion falls into a different category. He was a lawyer friend of Jack's whom Jack consulted for free advice after default on the principal mortgage. He had no communications in any form with Jack's parents. In those circumstances, there is no basis for a claim against him.

Factual Background

[7] Jack and Maryam lived at a property municipally known as 172 MacPherson Avenue in the city of Toronto, Ontario. Since 2010 the registered owners of that property had been Ms. Nazar and her father Mahmoud Nazar. In June 2021, Admore registered a second mortgage on the MacPherson property which Jack guaranteed.

[8] The mortgage on the MacPherson property bore interest at 11.5% per year. The principal amount of the mortgage included prepayment of seven months interest when the mortgage was registered. The first new payment of interest was due in March 2022. That payment was not made nor were the payments for April, May, or June 2022. Between March and May 2022 Jack kept assuring Admore that the payments would be made within days. They were not. After the June default, Admore commenced an action for possession.

[9] On November 16, 2022 Admore obtained a judgment requiring Jack and Maryam to deliver vacant possession of the property to Admore.

[10] Admore did not take out a writ of possession until October 18, 2023. In early December 2023 Jack and Maryam and their daughter were forced to vacate the property.

[11] Jack appears to have persuaded himself that he could still either refinance or sell the property on terms more favorable than Admore would obtain on a sale even though he had not been able to do so to date.

[12] As a result, Jack sought terms from Admore on which he could re-enter the premises and make further efforts to refinance or sell. Admore was prepared to entertain that idea but insisted on additional security. Jack proposed the home of his parents, Ludwik and Elzbieta.

[13] Ludwik is 88. Elzbieta is in her 70s. They have a modest suburban home on Winnipeg Road in Etobicoke between Eglinton Avenue and Dixon Road. Jack initially tried to persuade Ludwik and Elzbieta to provide a reverse mortgage or other form of mortgage on their home. They refused, apparently as a result of or with the assistance of their daughter Eva. Jack was incensed at their refusal and Eva's role in bringing it about. On Friday December 8, 2022 he wrote the following text to his sister Eva:

why why why. You could have used your expertise and told mom it's impossible to do a mortgage without a lawyer and a massive closing doc. Mom never even signed a request. You also could have called me. But no you called the fucking lender on the day we were finalizing an agreement. Because of YOU it's been pulled. I now have a sheriff evicting our family on Tuesday. You completely FUCKED me and my life. FUCK you I never want to see or hear from you ever again.

[14] It appears Jack persisted in pressuring his parents to provide a mortgage after December 8, 2022. He ultimately succeeded. On December 14, 2022 he pressured or persuaded his parents into signing a forbearance agreement in favour of Admore. The essential terms of that agreement were that Jack would be permitted to re-enter the MacPherson property provided that he listed it for sale by March 21, 2023 and provided seven posted dated monthly cheques in the amount of $3,500 each. The forbearance agreement terminated on July 1, 2024 absent any other default under the agreement. In exchange, Ludwik and Elzbieta were required to provide a collateral mortgage in the amount of $2,000,000 on their home.

[15] Ludwik and Elzbieta had lived in the home since 1987. It was free of any encumbrances.

[16] The forbearance agreement was signed during or after a meeting on December 14, 2022 at the home of Ludwik and Elzbieta. Jack and Maryam were present. This was also a meeting at which Ludwik and Elzbieta were purported to have received independent legal advice from the defendant, Robert Isles, via Zoom. Jack and Maryam were physically present during the initial meeting between Ludwik, Elzbieta, and Mr. Isles. Mr. Isles says Jack and Maryam "left the room".

[17] As noted earlier, Mr. Isles brings no motion for summary judgment as a result of which the action will proceed against him regardless of how this motion is disposed of. The parties agree that the issue of the nature and quality of the independent legal advice must proceed to trial.

[18] Jack did not refinance or sell the MacPherson property. Admore sold the property on July 31, 2024 with a deficiency of approximately $732,000 at the time of the hearing, including interest and costs. Admore seeks to recover that deficiency by moving for order that requires Ludwik and Elzbieta to deliver vacant possession of their home so that Admore can sell it.

[19] Ludwik and Elzbieta have joined a number of parties by way of counterclaim including Jack; Maryam; Mr. Isles; Howard Manis (the lawyer who acted for Jack on the transaction); and Peter Dale (a lawyer friend of Jack's who had some email exchanges with Admore at the early stages of Jack's negotiation of the forbearance agreement). Messrs. Manis and Dale bring their own motions for summary judgment. Although Mr. Isles appeared through counsel at the summary judgment motions, he does not request any relief.

Admore's Motion for Summary Judgment

[20] Ludwik's and Elzbieta's counterclaim gives rise to issues of undue influence and unconscionability.

[21] In Bertolo v. Bank of Montreal the Court of Appeal for Ontario recognized that the relationship between a child "in the prime of life and parents in the evening of life is a relationship in which it should be appreciated that the possibility of influence exists." Given the nature of Jack's text to Eva, quoted above, and the overall implausibility of Jack being able to sell or re-finance his property after failing to do so in the 21 months before his first eviction from the property in December 2023, there is at least a genuine issue for trial about the existence of undue influence.

[22] Admore notes that it insisted on and received a certificate of independent legal advice. It relies on the decision of the Alberta Court of Appeal in Cain v. Clarica Life Insurance Company, where the court stated: "Where unconscionability (or undue influence) is alleged, independent legal advice is usually a complete answer to the claim."

[23] Admore further submits that any concern about the quality of the independent legal advice is not a concern of Admore's but may establish a claim against Mr. Isles.

[24] Admore characterizes the evidence as showing that Ludwik and Elzbieta knew that they could lose their home and that they were willing to run that risk in order to help their son. I note in this regard that none of the evidence in the record relates to any communication with Ludwik about the mortgage. The only evidence about Ludwik's involvement is that: (i) he was the beneficiary of independent legal advice; (ii) Mr. Isles' says that he was satisfied about Ludwik's competence; and (iii) Ludwik did not actively participate in the meeting with Mr. Isles. The issue here, however, is not competence or capacity but whether undue influence and unconscionability are present here and how those concepts relate to each other and to independent legal advice.

[25] Unconscionability is an intensely fact driven concept.

[26] Although I appreciate Admore's submission that a certificate of independent legal advice is "usually" an answer to undue influence or unconscionability, that does not mean that it is a complete answer in every case. In my view, this case raises genuine issues about the extent to which the simple presence of a certificate of independent legal advice constitutes a complete defence to claims of undue influence or unconscionability.

[27] Recall that MacPherson property went into default in March 2022 without the first payment on the mortgage ever having been made. Admore obtained an order for vacant possession on November 16, 2022. It obtained a writ of possession almost a year later in October 2023 and enforced it and evicted Jack and his family from the MacPherson property in early December 2023.

[28] That chronology makes it highly unlikely that the MacPherson property could be refinanced or sold without a deficiency. The mortgage seems challenging and high-risk from the outset given its terms. Jack defaulted on the very first interest payment due under the mortgage. Although Jack had 21 months between March 2022 and December 2023 to either refinance or sell the property he could not do so. A court could easily draw the inference from those circumstances that the property was seriously underwater.

[29] Jack appears to have recognized this as well. On November 15, 2023 he sent Admore a text message saying among other things:

The market on our street has killed all equity so I think this will serve both sides. I needed the sheriff's letter to get my parents to act and provide their property.

[30] Recall as well that between March 2022 and December 2023, the Bank of Canada raised its policy interest rate 10 times. One could expect a mortgage lender like Admore to appreciate that this would put downward pressure on real estate prices.

[31] It is in those circumstances that Admore took a collateral mortgage on the home of Jack's elderly parents. The benefit of that collateral mortgage was that Jack would receive the right to occupy the property for six more months to do something he had been unable to in the preceding 21 months. The benefit to Admore was extraordinary. It changed Admore's position from one of suffering an almost certain loss on the sale of the MacPherson property into one of virtually guaranteeing full recovery by virtue of the additional $2,000,000 mortgage on Ludwik's and Elzbieta's unencumbered home.

[32] Section 2 of the Unconscionable Transactions Relief Act provides:

2. Where, in respect of money lent, the court finds that, having regard to the risk and to all the circumstances, the cost of the loan is excessive and that the transaction is harsh and unconscionable, the court may,

(a) reopen the transaction and take an account between the creditor and the debtor; ...

(d) set aside either wholly or in part or revise or alter any security given or agreement made in respect of the money lent, and, if the creditor has parted with the security, order the creditor to indemnify the debtor.

[33] In my view, there is a genuine issue for trial about the extent to which "having regard to the risk and to all the circumstances, the cost of the loan is excessive and that the transaction is harsh and unconscionable." The cost of the loan here is for an elderly couple to provide a collateral mortgage on their home to allow Admore to avoid the high probability of deficiency on the MacPherson property in exchange for which Jack and Maryam would receive a further 6 months to refinance or sell the MacPherson property. Something they had not been able to do in the previous 21 months. In the circumstances described above it was a virtual certainty that further enforcement proceedings would occur after six months and that the collateral mortgage would be called on. If it were otherwise, Jack would probably have been able to refinance or sell the property well before he was forcibly evicted from it.

[34] There is a genuine issue for trial about the interplay of Admore's knowledge about the circumstances that led to the default on the MacPherson property, the state of the real estate market, the likelihood of a deficiency on the sale of the MacPherson property, and Admore's ability to rely on a certificate of independent legal advice. By way of example, the fact Jack defaulted on the very first interest payment he was obliged to pay under the MacPherson mortgage and the fact that the mortgage had already been in default for 21 months may well be relevant for a lawyer giving Ludwik and Elzbieta independent legal advice. The record does not disclose whether Mr. Isles was aware of those facts. If Admore did not communicate those facts clearly to Mr. Isles, Ludwik, or Elzbieta there is an issue about the extent to which it should be entitled to rely on the mere presence of a certificate of independent legal advice.

[35] In support of its position, Admore relies on the recent decision of Justice Shaw in Flexpark Inc. v. Ercolani, in which she rejected allegations of unconscionability and undue influence in connection with the mortgage. A key distinguishing feature in Flexpark is that the mortgagor was the beneficiary of the mortgage. That is quite different from a collateral mortgage obtained when the principal mortgage had been in default for 21 months, was likely seriously underwater, and was highly likely to involve further enforcement proceedings only six months after the collateral mortgage was granted.

[36] In Hryniak v. Mauldin, the Supreme Court of Canada said the following about the appropriateness of summary judgment:

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.

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.

[37] I have no confidence in a conclusion I can make on the record before me about whether Admore is entitled to summary judgment. What I have described as genuine issues for trial are issues that require a trial to resolve. They involve issues where discovery of documents is potentially critical, especially as it relates to an assessment by Admore about the likelihood of a deficiency on the MacPherson property, the likelihood of enforcement proceedings after the forbearance agreement expired, and the communication of any information about the history of the MacPherson mortgage to Ludwik, Elzbieta, or Mr. Isles. Even if there are no such documents, I can see this being a situation where viva voce examination and cross-examination of witnesses on both sides will be essential to determine what witnesses knew or ought to have known at the material times. As noted above, findings of unconscionability are nuanced and fact intensive. I can see many avenues of cross-examination of both Admore and Mr. Isles that would help establish unconscionability vis-à-vis Admore and potentially prevent Admore from enforcing its collateral mortgage.

[38] This is also a case where the summary judgment that Admore seeks would be a motion for partial summary judgment in that other defendants such as Mr. Isles, Jack, and Maryam would continue to be defendants in the proceeding. It is quite possible that, depending on the evidence at trial, a trial judge could come to a different conclusion about Admore's liability than would a judge on a motion for summary judgment who is in effect, considering Admore's position based solely on two pieces of paper: the collateral mortgage and the certificate of independent legal advice.

[39] I have considered whether it would be appropriate to use the enhanced fact-finding procedures under Rule 20 and hear oral evidence. In my view, that would not be the appropriate way to proceed. It would still deprive Ludwik and Elzbieta of the benefits of discovery and would create the same issues of partial summary judgment vis-à-vis the remaining defendants. Given that this case raises issues about the interplay of undue influence, unconscionability and independent legal advice, a court would need to hear from all parties on all issues relating to these concepts to come to an informed decision. Put another way, a court would require a full trial.

The Summary Judgment Motion of Howard Manis

[40] Mr. Manis acted as Jack's lawyer. He had a single conversation with Elzbieta several days after the collateral mortgage had already been registered.

[41] Elzbieta describes that conversation as follows in her affidavit:

I was very anxious and Jack arranged a 3 Way call with Howard (later known to be Howard Manis, who was apparently Jack and Miriam's Lawyer) just before Christmas. The lawyer, Howard, said to me that I had "a great son" and he said don't worry, they are getting a new mortgage in January 2024 and you will be "off" in one month. Howard said houses sell fast on that street (MacPherson where Jack's House is). Jack said Howard works on mortgages and he was helping Jack with the mortgage. I didn't think a lawyer would lie to me. So, I trusted what Howard said. He said they (meaning the plaintiff company) can't go after two houses and Jack's Parents would be off the paperwork in a month. Howard still did not mention any mortgage being registered on Our Home.

[42] Mr. Manis has a different version of that conversation. In his affidavit he described it as follows:

Within days after the Forbearance Agreement was executed and the Collateral Mortgage registered, Jack called and requested that I speak with his mother, Elzbieta Hajduk. I advised Jack that it was inappropriate for me to speak with her given that she was represented by her own independent counsel. Despite same, Jack put Elzbieta Hajduk on the phone. I advised Elzbieta Hajduk that it was inappropriate for me to speak with her and that she should contact her own lawyer for information or advice. I did not discuss the Forbearance Agreement nor the Collateral Mortgage with Elzbieta Hajduk, contrary to the allegations contained in the Statement of Defence and Counterclaim.

[43] As a general rule, a lawyer owes a duty of care to their own client, and not to others. Only in narrow or exceptional circumstances will a lawyer be held to owe a duty to a non-client, third party. To hold otherwise could easily put the lawyer into a position of conflict with the duty they owe to their own client.

[44] A duty of care may be found if a solicitor voluntarily assumes responsibility for the third party or places him or herself in a relationship of sufficient proximity to the third party so that damage suffered because of the solicitor's negligence is reasonably foreseeable. It must be shown that in all the circumstances, the third party reasonably relied upon the lawyer to protect its interests and that the lawyer knew or ought to have known of the reliance.

[45] There is a difference of view about what occurred in the conversation between Elzbieta and Mr. Manis that requires a trial to resolve. Neither the affidavit of Elzbieta nor that of Mr. Manis gives me sufficient information to allow me to prefer one over the other.

[46] Elzbieta's affidavit suggests that the purpose of the call with Mr. Manis was to assuage her concerns. On the record before me that is not far-fetched. Although Mr. Isles was supposed to be her lawyer, the meeting with him had been set up by Jack. The reporting package arising from that meeting was sent to Jack, not to Ludwik and Elzbieta. As a result, it makes some sense that Elzbieta would call Jack to set up another conversation with a lawyer.

[47] A closer reading of Mr. Manis' affidavit quoted above reveals that Mr. Manis does not specifically deny the statements that Elzbieta attributes to him in her affidavit. Mr. Manis' affidavit is not necessarily inconsistent with the version of events Elzbieta describes.

[48] Mr. Kestenberg, on behalf of Mr. Manis, makes the point that the mortgage was already registered by the time the conversation with Mr. Manis occurred. That may not, however, be the end of the matter. On the record before me, Elzbieta and Ludwik did not know that the mortgage had already been registered because no one had reported to them. In addition, on the record before me there is no evidence about when Jack and his family re-entered the MacPherson property. It is possible that, if they had not re-entered yet, Elzbieta may have been able to contact Admore and revoke the forbearance agreement. Here too, there are enough facts to create issues that I cannot resolve on the paper record before me and which will depend on an assessment of credibility of Elzbieta and Mr. Manis in the context of all the circumstances of the case.

The Summary Judgment Motion of Peter Dale

[49] The summary judgment motion of Peter Dale falls into a different category. I grant summary judgment in his favour and dismiss the counterclaim against him.

[50] The claim against Mr. Dale is based principally on him being the person to whom an acknowledgement and direction in respect of the collateral mortgage is addressed. The acknowledgement is signed by Ludwik and Elzbieta and directs Mr. Dale to deliver and register the collateral mortgage.

[51] Mr. Dale is a lawyer and longtime friend of Jack's. He is a lawyer whom Jack initially consulted as a friend for advice after the MacPherson mortgage went into default. In addition, Mr. Dale had a few communications with Admore in regard to the MacPherson mortgage. Mr. Dale had no involvement after November 27, 2023. Mr. Dale had no communications with either Ludwik or Elzbieta. Mr. Dale does not understand how his name got onto the acknowledgement and direction.

[52] At its highest, the presence of Mr. Dale's name on the acknowledgement and direction would indicate that he is a lawyer acting on behalf of Admore for the purposes of registering the mortgage. That would not give Ludwik or Elzbieta a cause of action against him.

[53] At one point, the counterclaim summarizes the claim against Mr. Dale as follows: "Dale, as a lawyer, owed a duty to the public including [the plaintiffs by counterclaim] and failed to act properly and within the law."

[54] It is highly doubtful that any lawyer owes a general duty to the public. There is no basis set out in the record before me pursuant to which Mr. Dale could be found to owe a duty to Ludwik or Elzbieta given that he had no contact with them in any form.

[55] Although granting summary judgment in favour of Mr. Dale would grant partial summary judgment, I am satisfied that doing so would not offend the test set for partial summary judgment by the Ontario Court of Appeal in Malik v. Attia. In Malik, the court required a party moving for summary judgment to:

(a) Demonstrate that dividing the determination of the case into several parts will prove cheaper for the parties;

(b) Show how partial summary judgment will get the parties' case in and out of the court system more quickly; and

(c) Establish how partial summary judgment will not result in inconsistent findings by the multiple judges who will touch the divided case.

[56] Granting summary judgment in favour of Mr. Dale will make the litigation cheaper and faster for the parties in that there is one less defendant. I also satisfied that granting summary judgment in his favour will not lead to the possibility of inconsistent findings by other judges. Mr. Dale's role in the piece is limited and legally discrete from the roles of others. The potential liability or extent of the liability of others is in no way affected by Mr. Dale's involvement.

[57] The claim against Mr. Dale is also articulated as one of conspiracy. In Canada Cement Lafarge Ltd. v. British Columbia Lightweight Aggregate Ltd., the Supreme Court of Canada held that a claim for conspiracy must allege that two or more persons combined to use lawful or unlawful means for the predominant purpose of causing injury to the plaintiff, or where the conduct of two or more people is unlawful and is directed at the plaintiff, the defendants ought to know that harm to the plaintiff was likely and did result.

[58] At paragraph 52 of the Hajduks' Statement of Defence and Counterclaim, they allege that, "The DTTCC [defendants to the counterclaim] acted with implicit or deliberate agreement and understanding to undermine the PTTCC's [plaintiff to the counterclaim] rights and interests for the sake of the DTTCC's individual and/or collective benefits from the registration of the Collateral Mortgage".

[59] The Plaintiffs have submitted no evidence to support their allegations of conspiracy against Mr. Dale. Mr. Dale, in his capacity as a lawyer for Jack (albeit acting pro bono) had some brief exchanges with Admore and found his name placed on an acknowledgement and direction in favour of Admore. That is insufficient to sustain a claim of conspiracy.

Conclusion and Costs

[60] For the reasons set out above, I dismiss the motions for summary judgment brought by Admore and Mr. Manis, and grant the motion for summary judgment brought by Mr. Dale.

[61] Any party seeking costs arising out of these reasons will have three weeks to deliver written submissions. The responding party will have two weeks to deliver its answer with a further one week for reply.

Date: August 11, 2025

Koehnen J.