Dawson et al. v. Rexcraft Storage and Warehouse Inc. et al., (1998) 111 O.A.C. 201 (CA)

• Judge: Charron, Rosenberg and Borins, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: August 13, 1998
• Jurisdiction: Ontario
• Citations: (1998), 111 O.A.C. 201 (CA);1998 CanLII 4831 (NS CA);1998 CanLII 4831 (ON CA);164 DLR (4th) 257;[1998] CarswellOnt 3202;[1998] OJ No 3240 (QL);111 OAC 201;20 RPR (3d) 207;26 CPC (4th) 1;81 ACWS (3d) 783

Dawson v. Rexcraft Storage (1998), 111 O.A.C. 201 (CA)

MLB headnote and full text

Temp. Cite: [1998] O.A.C. TBEd. AU.008

Philip Dawson [et al., names omitted] (plaintiffs/appellants) v. Rexcraft Storage and Warehouse Inc. [et al., names omitted] and the Bank of Nova Scotia (defendants/Bank of Nova Scotia respondent)

(Nos. C22661, C23102)

Pacific & Western Trust Company (plaintiff/respondent) v. Patrick Carroll (defendant/appellant)

Household Realty Corporation Limited (plaintiff) v. Patrick Carroll (defendant)

Patrick Carroll (plaintiff by counterclaim) v. Household Realty Corporation Limited [et al., names omitted] (defendants by counterclaim) and Nelligan/Power (third party)

(No. C22849)

Indexed As: Dawson et al. v. Rexcraft Storage and Warehouse Inc. et al.

Ontario Court of Appeal

Charron, Rosenberg and Borins, JJ.A.

August 13, 1998.

Summary:

In one action (the Rexcraft action), the plaintiffs acquired warehouse storage condo­minium units from promoters. These acqui­sitions were represented as tax shelters and the transactions were entirely tax driven. The promoters misrepresented the value of the investments. The purchase price was paid $300 down with the rest financed by a first mortgage in favour of SHMIC, a second, vendor take back, mortgage in favour of Reicor and the balance financed through an unsecured loan from the Bank of Nova Scotia. Reicor assigned its mortgages to diverse assignees including Shivkumar. The investments failed. The plaintiffs sued for a declaration that they be relieved from their obligations to repay their loans from the Bank of Nova Scotia and the second mort­gage loans which Reicor assigned, including the ones to Shivkumar. The plaintiffs argued, inter alia, that the mortgages and the loans from the Bank of Nova Scotia were void and unenforceable because they were financing transactions collateral to the sale of an in­vestment to them by promoters who had failed to comply with the Securities Act. Shivkumar counterclaimed against the plain­tiff Simon, seeking payment of his mortgage monies. The Bank of Nova Scotia moved for summary judgment dismissing the plaintiffs' claim. Shivkumar moved for summary judg­ment allowing his counterclaim and dismiss­ing Simon's claim against him.

In two other actions (the Carroll actions), mortgagees sued Carroll for the amounts owing under their mortgages. Carroll coun­terclaimed, arguing inter alia, like the plain­tiffs above, that the mortgages were void and unenforceable. The mortgagees and Carroll each sought summary judgments to give effect to their claims.

The Ontario Court (General Division) granted summary judgments in favour of the Bank of Nova Scotia and Shivkumar in the Rexcraft action and in favour of the mort­gagees in the Carroll actions. The plaintiffs in the Rexcraft action and Carroll appealed.

The Ontario Court of Appeal allowed the appeal, holding that there was evidence capable of giving rise to genuine issues for trial. The court also held that the motions judge exceeded the role of a motions judge hearing a motion for summary judgment. The court ordered that the motion and appeal costs respecting the Shivkumar motion be reserved to the trial judge.

Practice - Topic 5701

Judgments and orders - Summary judg­ments - General - The Ontario Court of Appeal discussed the proper role of a motions judge hearing a motion for sum­mary judgment under rule 20 of the Rules of Civil Procedure (Ont.) - The court also discussed the purpose of rule 20 - See paragraphs 4 to 30.

Practice - Topic 5702

Judgments and orders - Summary judg­ments - Jurisdiction or when available - [See Practice - Topic 5708 ].

Practice - Topic 5708

Judgments and orders - Summary judg­ments - Bar to application - Existence of issue to be tried - Promoters of an invest­ment scheme that failed had misrepre­sented its market value - The investors sued, claiming that the mortgages and financing loans they took from lenders, including a bank, were unenforceable because they were financing transactions collateral to the sale of an investment to them by promoters who had failed to comply with the Securi­ties Act - The action also raised the issues of bank's alleged support of the promoters' misre­presentations, the bank's alleged duty of care to the investors, equitable set-off, credibility and privity of contract - A motions judge granted summary judgment in favour of the lenders - The Ontario Court of Appeal quashed this decision because the motions judge exceeded his role and because there was evidence capable of giving rise to genuine issues for trial.

Cases Noticed:

Aguonie v. Galion Solid Waste Material Inc. (1998), 107 O.A.C. 114; 156 D.L.R.(4th) 222 (C.A.), consd. [para. 4].

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 9].

AGF Canadian Equity Fund v. Transamerica Commercial Finance Corp. Canada (1993), 14 O.R.(3d) 161 (Gen. Div.), refd to. [para. 11].

T1T2 Ltd. Parternership v. Canada (1995), 23 O.R.(3d) 81 (Gen. Div.), affd. (1995), 24 O.R.(3d) 546 (C.A.), refd to. [para. 13].

Rogers Cable T.V. Ltd. v. 373041 Ontario Ltd. (1994), 22 O.R.(3d) 25 (Gen. Div.), refd to. [para. 17].

Ungerman (Irving) Ltd. v. Galanis and Haut (1991), 50 O.A.C. 176; 4 O.R.(3d) 545 (C.A.), consd. [para. 18].

Royal Bank of Canada v. Feldman (1995), 23 O.R.(3d) 798 (Gen. Div.), appeal quashed (1995), 27 O.R.(3d) 322 (C.A.), refd to. [para. 18].

Blackburn v. Lapkin et al. (1996), 28 O.R.(3d) 292 (Gen. Div.), refd to. [para. 18].

Jones v. Clinton and Ferguson (1998), 990 F. Supp. 657 (U.S. Dist. Ct. E. Dist.), consd. [para. 21].

Matsushita Elec. Indus. Co. v. Zenith Radio (1986), 475 U.S. 574 (S.C.), refd to. [para. 27].

Bossé v. Mastercraft Group Inc. et al. (1995), 80 O.A.C. 185; 123 D.L.R.(4th) 161 (C.A.), refd to. [para. 62].

Holt v. Telford, [1987] 2 S.C.R. 193; 78 N.R. 321; 81 A.R. 385; 54 Alta. L.R.(2d) 193, refd to. [para. 65].

Coba Industries Ltd. v. Millies Holdings (Canada) Ltd. (1985), 20 D.L.R.(4th) 689 (B.C.C.A.), refd to. [para. 65].

Trident Holdings Ltd. v. Danand Invest­ments Ltd. et al. (1988), 25 O.A.C. 378; 64 O.R.(2d) 65 (C.A.), refd to. [para. 76].

Tri-S Investments Ltd. v. Vong, [1991] O.J. No. 2292 (Gen. Div.), refd to. [para. 76].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1; 99 D.L.R.(4th) 626, refd to. [para. 87].

Bradford Third Equitable Benefit Building Society v. Borders, [1941] 2 All E.R. 205 (H.L.), refd to. [para. 87].

Standard Investments Ltd. et al. v. Cana­dian Imperial Bank of Commerce (1985), 11 O.A.C. 318; 52 O.R.(2d) 473 (C.A.), refd to. [para. 89].

Canadian Bank of Commerce v. Yorkshire & Canadian Trust, [1939] S.C.R. 85, refd to. [para. 97].

Jacobson v. Williams (1919), 48 D.L.R. 51 (Alta. S.C.), refd to. [para. 97].

Edgeworth Construction Ltd. v. Lea (N.D.) & Associates Ltd. et al., [1993] 3 S.C.R. 206; 157 N.R. 241; 32 B.C.A.C. 221; 53 W.A.C. 221, refd to. [para. 99].

Slattery v. Slattery, [1945] O.R. 811 (C.A.), refd to. [para. 100].

DiGuilio v. Boland, [1958] O.R. 384 (C.A.), affd. [1961] S.C.R. vii, refd to. [para. 100].

Canning v. Avigdor, [1961] O.W.N. 59 (C.A.), refd to. [para. 100].

Avco Financial Services Realty Ltd. v. Bhabha (1994), 3 C.C.L.S. 264 (Ont. Gen. Div.), refd to. [para. 111].

Armstrong v. Nicol (R.J.) Homes Ltd. (1995), 7 C.C.L.S. 282 (Ont. Gen. Div.), affd. [1997] O.A.C. Uned. 185 (C.A.), refd to. [para. 111].

Spector v. Ageda, [1971] 3 All E.R. 417 (Ch. Div.), refd to. [para. 139, footnote 1].

Royal Bank of Canada v. Grobman et al. (1977), 18 O.R.(2d) 636 (H.C.), refd to. [para. 144].

Sidmay Ltd. et al. v. Wehttan Investments Ltd., [1968] S.C.R. 828, affing., [1967] 1 O.R. 508 (C.A.), consd. [para. 144].

Thomson (William E.) Associates Inc. v. Carpenter (1989), 34 O.A.C. 365; 61 D.L.R.(4th) 1 (C.A.), refd to. [para. 145].

Beer et al. v. Townsgate I Ltd. et al. (1997), 104 O.A.C. 161; 36 O.R.(3d) 136 (C.A.), refd to. [para. 145].

Statutes Noticed:

Rules of Civil Procedure (Ont.), rule 20.04, rule 21.01 [para. 7].

Authors and Works Noticed:

Fleming, J., The Law of Torts (8th Ed. 1992), p. 610 [para. 11].

Fridman, G.H.L., The Law of Contract in Canada (3rd Ed. 1994), pp. 682, 683 [para. 100].

Yeazell, S.C., Landers, J.M., and Martin, J.A., Civil Procedure (3rd Ed. 1992), p. 653 [para. 13].

Counsel:

Peter C.P. Thompson, Q.C., for the appel­lants, Dawson et al. and Carroll;

K. Scott McLean, for the respondent, the Bank of Nova Scotia;

Paull N. Leamen, for the respondent, Shivkumar;

Sean E. Cumming, for the respondent, Pacific and Western Trust Co.

This appeal was heard on February 9, 10 and 11, 1998, by Charron, Rosenberg and Borins, JJ.A., of the Ontario Court of Appeal.

On August 13, 1998, the judgment of the Court of Appeal was delivered and the following opinions were filed:

Borins, J.A. - see paragraphs 1 to 129;

Rosenberg, J.A., concurring - see para­graphs 130 to 149;

Charron, J.A., concurring - see para­graph 150.