




CITATION:
Tuerr Holdings Inc. v. Vrankovic, 2012 ONCA 5



DATE: 20120105



DOCKET: C53722



COURT OF APPEAL FOR ONTARIO



Cronk, Lang and Watt JJ.A.



BETWEEN



Tuerr Holdings Inc.



Respondent/Plaintiff



and



Peter Vrankovic



Appellant/Defendant



Lisa S. Corne, for the appellant



J. Greg Murdoch, for the respondent



Heard:
December 8, 2011



On appeal from the judgment of Justice W. L. MacPherson of the
          Superior Court of Justice, dated March 9, 2011.



ENDORSEMENT



[1]

Peter Vrankovic (Vrankovic) appeals from an order granting summary
    judgment to Tuerr Holdings Inc. (Tuerr) on Vrankovics guarantee of a second
    mortgage on a commercial property owned by Cambridge Place Commercial
    Corporation (Cambridge) of which Vrankovic was the president and a director.

[2]

Vrankovic says that the motion judge erred in granting summary judgment to
    Tuerr. He submits that the judge erred in holding that Vrankovic had waived his
    right as guarantor to advance deficiencies in Tuerrs prior attempt to enforce
    its security in response to the motion for summary judgment. Vrankovic also
    argues that the motion judge was wrong in her conclusion that the evidence
    adduced by him on the motion raised no genuine issues requiring a trial.

[3]

We would not give effect to either argument advanced by Vrankovic and,
    for the reasons that follow, would dismiss the appeal.

The Background

[4]

In April 2010, Cambridge was in default on its
    second mortgage to Tuerr. As a result of Cambridges default, Tuerr served a
    Notice of Intention to Enforce Security on Cambridge and a Notice to Attorn Rents
    on Cambridges tenants.

[5]

On April 29, 2010, Cambridge sought injunctive
    relief requiring Tuerr to withdraw its Notice to Attorn Rents and to inform all
    Cambridges tenants that their rents were to be paid to Cambridge rather than
    to Tuerr. Cambridge also sought relief from the consequences of its default on
    payment into court or to Tuerr of the amount of the outstanding arrears.

[6]

On May 14, 2010, the parties executed Minutes of
    Settlement and Forbearance Agreement. This document included an agreement by
    Tuerr to suspend any further enforcement proceedings on the mortgage until
    September 5, 2010, provided Cambridge paid the arrears owing to Tuerr and kept
    its first mortgage on the property, held by Meridian Credit Union (Meridian),
    in good standing.  The parties agreement under the Minutes of Settlement and
    Forbearance Agreement was subsequently confirmed by a consent court order dated
    May 17, 2010.

[7]

Vrankovic signed the Minutes of Settlement and
    Forbearance Agreement as president of Cambridge, with authority to bind the
    corporation, and also in his personal capacity.

[8]

Contrary to the terms of the Minutes of
    Settlement and Forbearance Agreement, and of the consent court order, Cambridge
    did not pay the arrears owing to Tuerr and defaulted on its first mortgage to
    Meridian.  Under s. 243(1) of the
Bankruptcy and Insolvency Act
, R.S.C.
    1985, c.B-3, Meridian obtained an order appointing a Receiver to sell the
    property.

[9]

Tuerr sued Vrankovic on his guarantee of the
    second mortgage and obtained summary judgment on the claim on March 9, 2011.

The Grounds of Appeal

[10]

The appellant seeks reversal of the order
    granting summary judgment on two main grounds, which we would paraphrase in
    these terms:

i.          that the motion judge erred in concluding that Vrankovic
    had waived his right to raise deficiencies in the Notice of Intention to
    Enforce Security sent by Tuerr by signing the Minutes of Settlement and
    Forbearance Agreement; and

ii.         that the motion judge erred in failing to find that the
    evidence filed in response to the motion, affidavits from Vrankovic and his son,
    raised genuine issues requiring a trial.

Discussion

[11]

We would not give effect to either ground of
    appeal.

Deficiencies in the
    Notice and Waiver

[12]

On April 29, 2010, Cambridge sought relief from
    the consequences of its default under the second mortgage. On May 14, 2010,
    Cambridge and Tuerr executed the Minutes of Settlement and Forbearance
    Agreement. According to that document, Cambridge withdrew its application
    seeking injunctive and other relief against Tuerr and Tuerr agreed to hold off
    on any further enforcement proceedings until September 5, 2010, as long as
    Cambridge did not default under the terms of the agreement or on the first
    mortgage to Meridian.

[13]

Vrankovic signed the Minutes of Settlement and
    Forbearance Agreement on behalf of Cambridge and in his own capacity. Unbeknownst
    to Tuerr, when Vrankovic signed the document, Cambridge was already in default in
    its mortgage payments to Meridian, the first mortgagee, and owed over $500,000
    in municipal taxes on the property. The motion judge concluded that by signing
    this document in his personal capacity, Vrankovic waived his right to raise any
    previous deficiencies in Tuerrs enforcement proceedings in response to the
    motion for summary judgment.

[14]

We agree.  The motion for summary judgment was
    based on Cambridges default under the Minutes of Settlement and Forbearance
    Agreement, which amended the terms of the second mortgage. What had occurred
    previously, in particular, the adequacy of prior notices sent to Cambridge, was
    at once irrelevant to a decision on the motion for summary judgment and, in any
    event, waived by Vrankovic.

[15]

The alleged deficiencies in Tuerrs enforcement
    measures were known to Cambridge and Vrankovic at the time they executed the
    Minutes of Settlement and Forbearance Agreement.  Indeed, they formed a principal
    basis for Cambridges injunction application.  Moreover, Cambridge breached the
    terms of the Minutes of Settlement and Forbearance Agreement in two respects:
    by failing to pay the arrears owing to Tuerr, as it promised to do, and by its
    default under the Meridian first mortgage.  Thus, whatever the nature of
    Cambridges prior complaints regarding Tuerrs attempts to enforce its
    security, under the bargain made in the Minutes of Settlement and Forbearance
    Agreement, Tuerr was entitled to enforce its security.

[16]

This ground of appeal fails.

The Absence of
    Genuine Issues Requiring a Trial

[17]

Vrankovic contends that the motion judge erred
    in failing to conclude that his affidavit evidence filed in response to the
    motion raised genuine issues requiring a trial.  In his affidavits and in that
    of his son, Vrankovic advanced the claim that, by oral agreement, Meridian
    agreed to forebear on enforcement of its first mortgage and to permit Cambridge
    to pay reduced rent so that Cambridge could pursue lease negotiations that
    would yield increased revenue from existing or potential tenants. This
    evidence, Vrankovic submits, afforded a viable defence to the assertion that
    Meridian was entitled to enforce its mortgage security.

[18]

Vrankovic further argues that the motion judge erred
    by misapprehending and failing to accept his evidence about the impact of
    Tuerrs Notice to Attorn Rents on Meridians willingness to forebear on its
    enforcement of the first mortgage. Vrankovic further complains that the motion
    judge relied on unreliable hearsay, or double hearsay, from a declarant who
    bore Vrankovic ill-will rather than on Vrankovics own firsthand account.

[19]

We disagree.

[20]

On the basis of the record before her, the
    motion judge was well-positioned to have a full appreciation of the evidence
    and the issues in the matter before her. She rejected, as she was entitled to
    do, Vrankovics bald assertions of an oral forbearance agreement with Meridian.
    These assertions were unsupported by any documentary evidence, at odds with
    commercial reality, and inconsistent with the terms of the first mortgage. Moreover,
    even on the most generous reading of Vrankovics affidavit materials, Cambridge
    was hopelessly in debt, in breach of the terms of the first mortgage and beyond
    rescue by any extended lease arrangements that were nowhere near completion.

[21]

The preference of the motion judge for the evidence
    contained in the affidavit of Tuerrs secretary-treasurer to Vrankovics
    assertions does not render the motion judges conclusion erroneous. Setting to one
    side the hearsay portion of the secretary-treasurers affidavit, Vrankovics affidavit
    materials were replete with unsubstantiated bald allegations of ongoing
    negotiations, barren of detail and unsupported by any documentary or other
    evidence from Meridian or existing or proposed tenants.  In particular,
    Vrankovic failed to adduce any convincing evidence of the alleged oral
    agreement with Meridian or to support his claim that Cambridge suffered damage,
    including the loss of prospective tenants, as a result of Tuerrs actions.  His
    evidence, therefore, failed to raise any genuine issues requiring a trial.

[22]

This ground of appeal lacks substance.

Conclusion

[23]

The appeal is dismissed. The respondent shall
    have its costs of the appeal, which we fix at $15,000 inclusive of
    disbursements and all applicable taxes.

E.A. Cronk J.A.

S.E. Lang J.A.

David Watt J.A.


