Mahmood v. Royal Bank of Canada

Khalid Mahmood, (Plaintiff/Respondent) v. The Royal Bank of Canada, 1459288
Ontario Limited, S & N Machinery & Design Co. Ltd. Fogler, Rubinoff, Noam
Goodman, Fogler, Rubinoff LLP, Steve Nikoloulius, Theoni Kardaras, Petro
Nikoloulius, Tien Chin Liew, Alpha Pita Inc., Arcadian Food Services Ltd.,
Arcadia Distributors Ltd. and The Toronto Dominion Bank,
(Defendants/Appellants)

Ontario Superior Court of Justice (Divisional Court)

Dunnet J.

Heard: June 25, 2002
Judgment: June 25, 2002
Docket: 216/02

Counsel: Larry W. Keown, for Defendants/Appellants, The Royal Bank of Canada

John Vamvakidis, for Defendants/Appellants, 1459288 Ontario Limited and Tien Chien Liew

Mohammed Muslim, for Plaintiff/Respondent

Subject: Corporate and Commercial; Insolvency; Civil Practice and Procedure

Personal property security — Practice and procedure — Summary proceedings.

Cases considered by Dunnet J.:

Aguonie v. Galion Solid Waste Material Inc., 156 D.L.R. (4th) 222, 107 O.A.C. 114, 1998 CarswellOnt 417, 38 O.R. (3d) 161, 17 C.P.C. (4th) 219 (Ont. C.A.) — considered

Statutes considered:

Personal Property Security Act, R.S.O. 1990, c. P.10

Generally — referred to

Repair and Storage Liens Act, R.S.O. 1990, c. R.25

Generally — referred to

s. 10(1) — referred to

MOTION for leave to appeal summary judgment setting PPSA priorities.

Dunnet J.:

1 An order dismissing a motion for summary judgment is interlocutory. The proper court for this motion for leave is the Divisional Court and not the Court of Appeal, as submitted by the respondent.

2 In his reasons, the motions judge finds that the bank’s registration was prior in time to any other registration. He also finds that apart from the respondent’s notification after default and before the sale, there was no evidence that the bank had notice of any interest the respondent may have had in the equipment.

3 The motions judge was presented with no case justifying a higher or any onus on the bank to entertain the claim of a stranger to an interest in the security.

4 In these circumstances, the motions judge, in my view, misstates the test for summary judgment in paragraphs 9 and 11 of his reasons when he refers to the possibility that a Court of equity might find such an obligation on the bank in the face of “weak, but non-existent” evidence offered by the respondent. Further, in paragraph 12, he states that on motions for summary judgment, the role of the judge is to determine “whether there is a prospect of a contest between the parties, not the probable outcome”.

5 In paragraph 6, he raises “Question 1” which he does not appear to answer and does not deal with the “second issue” — the alleged improvident sale.

6 In paragraph 12, he finds that the respondent’s claim is barred by s.10(1) of the Repair and Storage Liens Act and fails to dismiss that claim against the bank.

7 In paragraph 16, he misstates the law, in my view, where he finds on the facts of this case that “under rule 20.04(4), it is optional whether the motions judge resolves the question of law”.

8 I am mindful of the holding in Aguonie v. Galion Solid Waste Material Inc. (1998), 38 O.R. (3d) 161 (Ont. C.A.)that:

Summary judgment, valuable as it is for striking through sham claims and defences which stand in the way to a direct approach to the truth of a case was not intended to, nor can it, deprive a litigant of his or her right to a trial unless there is a clear demonstration that no genuine issue exists, material to the claim or defence, which is within the traditional province of a trial judge to resolve.

9 Nevertheless, and with respect, I find there is good reason to doubt the correctness of his order in relation to the proper test for summary judgment and the bank’s duty to strangers, in the face of the provisions of the Personal Property Security Act and the Repair and Storage Liens Act. These issues go beyond the interests of the parties and are relevant to the proper development of the law in these areas.

10 The motions of The Royal Bank of Canada and 1459288 Ontario Limited and Tien Chin Liew are allowed. The award of costs before Pitt J. is stayed pending the hearing of the appeals. The costs of the motions are reserved to the panel hearing the appeals.

Motion granted.