



COURT OF APPEAL FOR ONTARIO

CITATION:
Susin Estate v. TD Waterhouse Discount Brokerage (TD
    Waterhouse Canada Inc.), 2022 ONCA 101

DATE: 20220204

DOCKET: C68132

MacPherson, van Rensburg and
    Roberts JJ.A.

BETWEEN

John
    Susin The Executor of the Estate of Phyllis Susin

Plaintiff (Appellant)

and

TD
    Waterhouse Discount Brokerage,

division of
    TD Waterhouse Canada Inc.

Defendant
    (Respondent)

Adrienne Zaya, acting as agent for the
    appellant

Scott Gfeller, for the respondent

Heard: January 25, 2022 by video conference

On
    appeal from the judgment of Justice Benjamin T. Glustein of the Superior Court
    of Justice, dated February 12, 2020.

REASONS FOR DECISION

[1]

The appellant, John Susin (John), the executor
    of the Estate of Phyllis Susin, appeals the decision of Glustein J. of the Superior
    Court of Justice granting summary judgment to the respondent, TD Waterhouse
    Discount Brokerage, a division of TD Waterhouse Canada Inc. (TDW). In that
    decision, the motion judge dismissed Johns claim for damages relating to TDWs
    sell-out of two margin accounts on October 8, 2008. The two margin accounts
    were held by John and Phyllis Susin, although both were managed by John.

[2]

A margin account allows account holder/investors
    to purchase securities with borrowed funds. The margin is the difference
    between the market value of a stock and the loan amount, the loan being the
    amount of money a customer borrows from the broker to buy securities. Accounts
    have a margin requirement, which is the minimum amount that a customer must
    deposit in the account to purchase securities. A margin account is
    undermargined if the margin is greater than the margin requirement.

[3]

Both John and Phyllis held only Manulife shares
    in their accounts.

[4]

On the morning of October 28, 2008, Johns
    account was undermargined by $46,764.71 and Phyllis account was undermargined
    by $26,990.89. At about 10:00 a.m., Dimitry Kuchmar, a Credit Officer in the
    Credit and Risk Management Department of TDW, called John to bring this to his
    attention. On the motion, TDW produced a transcript of this call.

[5]

In the call, Kuchmar advised John that both
    accounts were in a high risk margin call and had to be covered as soon as
    possible. John asked for a little more time but Kuchmar replied that your
    account might be sold out at any time  so it may be today, may be
    tomorrow, may be Friday, may be next Monday. Kuchmar also said if you dont
    keep your margin on side, were not even going to call you were just going to
    cover your accounts right and there will be a message placed in your account
    that you are aware of a margin call.

[6]

On the same day, at approximately 1:45 p.m., TDW
    conducted a sell-out of the two margin accounts.

[7]

John assigned his cause of action to Phyllis and
    brought action relating to both accounts in the name of her estate.

[8]

TDW brought a motion for summary judgment. The
    motion judge granted the motion and dismissed Johns action. The motion judge
    concluded that (i) the Margin Agreement, (ii) the decision in
Questrade
    Inc. v. Gu
, 2011 ONSC 4106 (
Gu
), and (iii) the application of the
    doctrine of waiver itself, all preclude such a claim by John.

[9]

John appealed this decision. He filed a lengthy
    factum setting out many grounds of appeal and seeking punitive damages. Shortly
    before the appeal hearing, legal counsel, acting as agent for John, filed a
    concise factum setting out two grounds of appeal. At the appeal hearing,
    counsel argued these grounds of appeal and we will respond to them.

[10]

First, the appellant contends that Johns action
    was too complicated to be resolved on a motion for summary judgment. In
    particular, the appellant submits that the recording of the telephone
    conversation between John and Kuchmar was both inaudible in places and,
    perhaps, improperly compromised.

[11]

We do not accept this submission. The transcript
    of the telephone call records that Kuchmars advice and warning to John were
    crystal clear: the two accounts were in a high risk margin call and needed to
    be covered as soon as possible and might be sold at anytime.

[12]

Kuchmar also advised John that if the margins in
    the two accounts were not kept onside, TDW would just cover the accounts
    without any further call and that there would be a message placed on the
    account indicating that the account holder was aware of the margin call.

[13]

This was not a case like
Jack Ganz
    Consulting Ltd. v. Recipe Unlimited Corporation
, 2021 ONCA 907, where
    there was cogent conflicting evidence about verbal agreements or assurances. By
    the terms of the Margin Account contract, TDW had the right to make a sell-out
    as soon as the accounts were undermargined. TDW did not do this immediately.
    Instead, Kuchmar provided John with a clear warning. John did nothing and TDW
    made the sell-out just under four hours later. There was nothing in Kuchmars
    language to suggest that TDW would forebear from taking this step.

[14]

Second, the appellant in oral argument asserted
    that a party can choose not to rely on its strict rights and that this is what
    happened here. Accordingly, the trial judge erred by not addressing this issue.

[15]

We disagree. There is a substantial overlap
    between this issue and the first issue. Like on the first issue, the appellants
    argument fails when set against the fact of Kuchmars warning call and,
    especially, the clear language he used in conveying the warning that the
    accounts were undermargined
and
that corrective action by TDW was very
    imminent indeed.

[16]

We make one final comment. In the context of
    otherwise excellent reasons, the motion judge said: TDW was entitled to
    conduct the Sell-Out regardless of whether any extension was provided in the Kuchmar
    call. We would not want to be taken as endorsing this sentence. There may be a
    case where the words and conduct of a commercial lender require, in fairness, a
    careful assessment of their interplay with the strict contractual words. In
    this case, no such inquiry is required because there is an essential unity between
    the contractual wording and Kuchmars language in the phone call.

[17]

The appeal is dismissed. The respondent is
    entitled to its costs of the appeal fixed at $10,000 inclusive of disbursements
    and HST.

J.C.
    MacPherson J.A.

K.
    van Rensburg J.A.

L.B.
    Roberts J.A.


