



COURT OF APPEAL FOR ONTARIO

CITATION: Royal Bank of Canada v. Azkia, 2021 ONCA 89

DATE: 20210212

DOCKET: C67753

Rouleau, Benotto and Thorburn JJ.A.

BETWEEN

Royal Bank of Canada

Plaintiff/Defendant to Counterclaim

(Respondent)

and

Baharak Azkia, Diana Nekonam and Nader

Zanddizari also known as Nader Zand

Defendants/Plaintiffs by Counterclaim

(Appellants)

Hossein Niroomand,
for the
    appellants

Jeffrey Kukla, for the respondent

Heard: February 3, 2021 by videoconference

On appeal from the order of Justice Markus Koehnen of the
    Superior Court of Justice, dated November 11, 2019, with reasons reported at
    2019 ONSC 5894.

REASONS FOR DECISION

The order sought

[1]

This is an appeal of the order:

a)

granting summary
    judgment in favour of the respondent, Royal Bank of Canada (RBC) in three
    separate actions, and ordering payment of the sums owing by the plaintiffs to
    RBC;

b)

dismissing the appellants counterclaim in one action;

c)

granting RBC possession of the premises; and,

d)

vacating the certificates of pending litigation (CPLs) on the two
    properties at 56 Hawksbury Drive and 326 St. Clements Avenue (the two
    properties).

[2]

The appellants seek to overturn the dismissal of their counterclaim and
    stay the judgments pending the trial of the appellants counterclaim. They also
    seek leave to adduce new evidence on this appeal.

The basis for the claims

[3]

RBC lent money to the appellants by way of mortgages, demand loans, lines
    of credit, overdrafts and credit cards. The total principal and interest owing
    as of October 5, 2018 was approximately $4,852,286.02.

[4]

RBC commenced three separate actions on the various debts. The actions
    relate primarily to mortgages made in favour of RBC secured by the two
    properties, and a demand loan which the bank claimed was secured by a second
    mortgage on one of those properties.

[5]

The appellants filed a counterclaim in the third action seeking damages
    in the amount of $3,650,000 in connection with RBCs registration of cautions
    and two certificates of pending litigation on the two properties (the CPLs).

The motions for summary judgment

[6]

RBC brought a motion for summary judgment in each of the three actions.

[7]

The appellants did not dispute the debt, but opposed the request for summary
    judgment on the basis that there was a sufficiently close connection among the
    three actions that it would be inequitable to allow RBC to obtain summary
    judgment in respect of the three claims without first deciding the counterclaim
    and permitting the appellants to set off any award in the counterclaim against
    amounts owing in the other actions.

[8]

The appellants also took the position that the CPLs were improperly
    granted resulting in damage to the appellants which damage should be assessed
    prior to the granting of any order for summary judgment.

[9]

The motion judge summarized the appellants position at para. 46 of his
    decision as follows:

The gist of the defence is that the defendants were renovating
    326 St. Clements in order to sell it. They had a buyer, but the sale did not
    close because the certificate of pending litigation prevented the [appellants]
    from obtaining a small amount of additional financing from a third party which
    would have enabled them to complete the renovations.

[10]

On
    November 11, 2019, the motion judge granted summary judgment in favour of RBC
    in all three actions. Although he vacated the CPLs because of RBCs failure to
    make proper disclosure in the course of obtaining the CPLs on an
ex parte
motion, he dismissed the appellants counterclaim.

[11]

He
    held that the appellants had not demonstrated that there is any issue that
    requires a trial, as the counterclaim for damages was implausible and the
    defendants have not provided any evidence at all about their damages, let alone
    sufficient evidence to demonstrate that a trial is required on damages.

[12]

His
    reasons for so finding, at paras. 49-56, are set out below:

If it is true that [the appellant] Mr. Zanddizari needed only
    $100,000 to complete the renovation of 326 St. Clements, one might have expected
    Mr. Zanddizari to explain that to RBC and try to arrange additional financing.
    RBC had a material interest in completing the sale of 326 St. Clements because
    that would free up money to repay the demand loan. There is no evidence of any
    efforts by Mr. Zanddizari to enter into arrangements like this with RBC and no
    explanation for his failure to do so.

If Mr. Zanddizari had two other lenders whose loans would fund
    the renovation and bring the demand loan into good standing, one might expect
    him to advise RBC of that fact and try to enter into an arrangement whereby the
    additional loan to complete construction of 326 St. Clements would have
    priority over the certificate of pending litigation. Once again there is no
    evidence to suggest that Mr. Zanddizari tried to make such an arrangement and
    no explanation for his failure to do so.

Mr. Zanddizari provides no information about these other
    lenders. He does not disclose the lenders' names, the loan documentation or the
    terms of the loans.

Mr. Zanddizari does not describe what work was left to be
    completed on 326 St. Clements Avenue beyond describing it a small amount of
    work and appliances. He has not produced any photographs that would allow me
    to compare the renovations that had already been completed with the work that
    remained.

While he was discussing bringing the demand loan back into good
    standing between September 2017 and January 2018, Mr. Zanddizari sent the bank
    a screenshot of an account he had at CIBC showing a balance of $137,016.05. Mr.
    Zanddizari told RBC that when this deposit cleared within a few days, he would
    transfer the money into his RBC account to cover his overdue loan balance of
    $70,000. He never did so.

If Mr. Zanddizari was being honest in his statements to RBC, he
    in fact had funds that exceeded the approximately $100,000 he needed to finish
    off the renovations on 326 St. Clements Avenue. Mr. Zanddizari provided no
    explanation for why the funds in his CIBC account could not be used to complete
    the renovations on St. Clements.

Mr. Zanddizari also made no efforts to set aside the
    certificate of pending litigation. If this were truly a case of losing a sale
    of St. Clements Avenue, Mr. Zanddizari had ample time to set aside the
    certificate of pending litigation. According to Mr. Zanddizari, the purchaser
    extended the closing to February 28, 2019. This gave Mr. Zanddizari just short
    of 12 months to set the certificate of pending litigation aside, obtain
    additional funds and sell the property. He took no steps to set aside the certificate
    of pending litigation until the end of January 2019. Even then he did so only
    in response to RBC's motion for summary judgment.

Similarly, Mr. Zanddizari has provided no explanation for his
    damage claim of $3,500,000. On the record before me, it is simply a number that
    has been inserted into a counterclaim.

[13]

However,
    the motion judge dismissed RBCs request for an order for a legal or equitable mortgage
    in respect of the demand loan over the two properties. RBC had not established
    on a balance of probabilities that there was a mutual intention by the parties
    to grant a mortgage on those properties as security for the demand loan.

The issues on this appeal

[14]

The
    issues on this appeal are (1) whether the motion judge erred in finding that
    there was no genuine issue requiring a trial in respect of the appellants
    counterclaim and refusing to order a stay of execution on the judgments, and
    (2) whether the appellants should be permitted to adduce new evidence on appeal.

Analysis and conclusion

[15]

As
    explained in
Hryniak v. Mauldin
, 2014 SCC 7, [2014] 1 S.C.R. 87, at
    para. 49:

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 summary
    judgment motion. This will be the case when the process (1) allows the judge to
    make 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.

[16]

The
    appellants take issue with the motion judges finding that there is no genuine
    issue for trial.

[17]

Although
    parties are required to present the best version of their case on a motion for
    summary judgment, the appellants adduced no evidence from lenders that they
    would have advanced funds even if the CPLs had not been placed on title. It was
    therefore open to the motion judge to reject the appellants evidence regarding
    damages. His findings are owed deference.

[18]

The
    motion judge accepted the appellants submission that the CPLs should not have
    been placed on the properties and ordered that the CPLs be vacated. However, he
    held that the appellants had not suffered damages as a result of the CPLs, as
    pleaded in the appellants counterclaim.

[19]

On
    this appeal, the appellants seek leave to introduce an exhibit of documents most
    of which were not before the motion judge. The exhibits are not appended to an
    affidavit and consist of letters and other documentation regarding refinancing.
    In oral submissions, counsel for the appellants claimed that two letters, one
    to a possible lender and the other to RBC, were provided in support of the
    appellants cost submissions and should therefore be allowed to be introduced
    on appeal.

[20]

This
    evidence does not meet the test for the introduction of new evidence on appeal:
    see
Palmer v. R.
, [1980] 1 S.C.R. 759, at p. 775;
Sengmueller v.
    Sengmueller
, 111 D.L.R. (4th) 19 (Ont. C.A.), at p. 23.

[21]

The
    appellants were represented at trial and this evidence should and could have
    been obtained prior to the motion, through the exercise of reasonable
    diligence. Moreover, it was not attached to a sworn affidavit and there has
    been no opportunity for the respondent to examine or cross-examine on this
    evidence. In any event, this new evidence, like the evidence proffered to the
    motion judge,
does not demonstrate any
    quantifiable damages suffered by the appellants
and
    thus, could not reasonably have affected the result
.

[22]

As
    set out above, the motion judge gave ample reasons for his finding that the
    appellants:

a)

did not satisfy him that they were unable to sell the property;

b)

did not take appropriate steps to address the CPLs with RBC; and,

c)

did not
    adduce evidence to outline the steps taken to complete the renovations required
    to sell the property.

[23]

We
    see no error in these findings, nor do we accept that the motion judge erred by
    failing to consider the defence of equitable set-off.

[24]

As
    such, the appeal  seeking to set aside the order dismissing the counterclaim
    and, if such an order is granted, requesting that the execution of the judgment
    in favour of RBC be stayed, pending resolution of the counterclaim  is
    dismissed.

[25]

We
    order costs payable to the RBC in the amount of $15,000, all inclusive.

Paul
    Rouleau J.A.

M.L. Benotto J.A.

J.A. Thorburn J.A.


