) ) Suzanne Johnson Plaintiff/Responding Party – v. –, 2017 ONSC 7772

CITATION : Johnson v. Canada Motor Car Inc. , 2017 ONSC 7772 COURT FILE NO.: 14-59801 DATE: 2017/08/18 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ) ) Suzanne Johnson Plaintiff/Responding Party – and – Canada Motor Car Inc. (2063882 Ontario Inc.), Ross Campagna, Roy Rashidpour and Ashish Bhattarai Defendants/Moving Parties ) ) ) ) ) ) ) ) ) ) ) Sabrina J. Herscovitch , for the Plaintiff Monick L. Grenier, for the Defendants, Canada Motor Car Inc. and Ashish Bhattarai ) ) ) HEARD AT OTTAWA: June 9, 2016 RULING ON MOTION FOR

SUMMARY JUDGMENT COrthorn J. Overview [ 1 ] A multiplicity of proceedings arising from the same conduct alleged on the part of the defendants has, in this matter, led to a motion for leave to amend the statement of claim (

a) in

part in response to developments in the related proceeding in the Ontario Court of Justice, and (

b) in

part in response to the defendants’ motion for

summary judgment. [ 2 ] This matter falls within the scope of the Simplified Procedure [1] . The parties have already conducted extensive cross- examinations on the affidavits filed on the

summary judgment motion. More than three years have passed since the statement of claim was issued. It is possible that by the time the matter is concluded the costs incurred by the parties may exceed the monetary amount involved in the plaintiff’s claim (if the costs incurred do not already exceed the monetary amount involved). [ 3 ] In determining the issues on the pleading motion and on the motion for

summary judgment, I am mindful of the principle of proportionality. Background [ 4 ] In the summer of 2011, the plaintiff decided to purchase a car. She was concerned that she did not have a credit rating and would be unable to obtain the financing she required towards the purchase price of a car. The plaintiff’s son referred her to CMC; he had previously purchased a vehicle at that dealership. [ 5 ] The plaintiff went to CMC and, through her dealings with Bhattarai and Campagna, purchased a vehicle.

She signed a Consumer Credit Application, a Conditional Sale Contract (on TD Financing Services letterhead), and a Used Vehicle Bill of Sale (on Canada Motor Inc. letterhead). [ 6 ] The plaintiff purchased a 2010 Dodge Caliber. The purchase price was $16,440. The financing secured through CMC with the TD Bank was at an interest rate of 24.5 per cent. The bill of sale identifies the total balance due, including the cost of financing ($21,800), as $41,700. [2] [ 7 ] The plaintiff understood that (

a) she was purchasing the vehicle as part of a credit re-building program, and (

b) the re- building of her credit would occur over a 10-month period. She understood the terms of the program to include that at the end of the 10 months, and assuming she made all of the payments in that period on time, she would be entitled to do one of three things:

a) Return the car to CMC, without any further payment obligation;

b) Re-finance the car at an interest rate lower than 24.5 per cent and pay the revised balance owing on purchase price of the car; or

c) Use the car as a trade-in towards the purchase of another vehicle, financed at an interest rate lower than 24.5 per cent. [ 8 ] When the plaintiff returned to CMC in the summer of 2012 to return the car, she was informed that she was not entitled to return the car without further payment obligation. CMC gave the plaintiff two options: re-finance the purchase of the car or trade the car in and purchase another vehicle.

The re-financing or financing, respectively, would be an interest rate lower than 24.5 per cent. [ 9 ] The plaintiff was surprised to learn that she was not entitled to simply return the vehicle to the dealership. She attempted to reach a settlement with the defendants, was unable to do so, and in 2014 commenced this action. [ 10 ] The plaintiff’s claims are framed in (a) “false, misleading and/or deceptive misrepresentation and unconscionable representation”, and (

b) breach of the Consumer Protection Act, 2002 [3] (“CPA”). With respect to the latter, the statement of claim refers to a complaint registered by the plaintiff against CMC with the Ontario Motor Vehicle Industry Council (“OMVIC”). The complaint is alleged to have been made in January 2013. The pleading refers to charges being laid against CMC pursuant to the CPA.

The pleading also implies that complaints received by OMVIC from other individuals form part of the basis of the charges. [ 11 ] The defendants deny that there was any misrepresentation on their part when dealing with the plaintiff and deny that they breached the provisions of the CPA .

The defendants allege that: • It was clear to and fully understood by the plaintiff at all times that she was purchasing a vehicle; • The options available to the plaintiff at the end of the 10-month credit re-building period were equally clear to and understood by her; • The plaintiff was mistaken in her belief that she would be able to simply return the car at the end of the 10-months; • The defendants responded to the plaintiff’s efforts to return the car in 2012 by assisting her in securing financing at a lower rate with which to pay a revised balance owing for the vehicle; and • Despite the efforts they made in 2012, the plaintiff refused to accept their offers of assistance and, as a result, failed to mitigate the damages, if any, that she suffered. [ 12 ] After the completion of the exchange of pleadings, a settlement of the plaintiff’s claims against Campagna and Rashidpour was reached.

The claims against those individuals were dismissed without costs in April 2016. The remaining defendants, CMC and Bhattarai bring the motion for

summary judgment and request an order dismissing the claims against them. The OMVIC Proceeding [ 13 ] The plaintiff’s complaint to OMVIC was made before the statement of claim was issued. Based on the contents of the pleading, the plaintiff appears to have been aware, when the pleading was issued, that other individuals had also made complaints to OMVIC regarding CMC. By September 2015, when she swore her affidavit in response to the motion for

summary judgment, the plaintiff had additional information regarding the complaints to and proceedings before OMVI. [ 14 ] An Agreed Statement of Facts (“ASF”), signed by the President of CMC [4] , is included as an exhibit to the plaintiff’s affidavit. The ASF is from a proceeding in the Ontario Court of Justice (Provincial Offences Court) in which CMC and its President are named as parties. The contents of the ASF include: • An admission by CMC that between September 2009 and April 2012, it engaged in unfair practices prohibited by

section 17 of the CPA ; • The names of thirteen consumers, including the plaintiff, who made complaints to OMVIC regarding CMC; • An admission by CMC that it made “false, misleading and deceptive representations about its credit rebuilding program” to each of the thirteen consumers; and • Admissions as to conduct specifically related to three of the thirteen consumers. The plaintiff is not one of the thirteen consumers. [ 15 ] In April 2016, prior to the initial return of the motion for

summary judgment, the plaintiff brought the pleading motion. It was returnable in express motions court before Master MacLeod (as he then was). The defendants opposed the motion. In any event, Master MacLeod identified that the matter was properly the subject of an express motion. He adjourned the pleading motion to June 9, 2016 to be heard by him as part of his regular motions list. [ 16 ] In adjourning the pleading motion, Master MacLeod noted the April 27, 2016 return date of the motion for

summary judgment. In his endorsement on the adjournment of the pleading motion, Master MacLeod said, “it is not necessary that [the motion for leave to amend the pleading] be argued earlier because either the judge [hearing the

summary judgment motion] may take notice of the proposed amendments or they are immaterial to the grounds on which the defendants seek [summary judgment].” [ 17 ] As it turned out, the motion for

summary judgment was adjourned from April 27 to June 9, 2016. The pleading motion and the motion for

summary judgment were heard by me on the latter date. [ 18 ] The amendments proposed to the statement of claim include (

a) an increase from $20,880 to $24,575 in the pecuniary damages claimed by the plaintiff, and (

b) the addition of a substantive paragraph in which specific reference is made to the ASF. The plaintiff seeks leave to add the following substantive paragraph to her pleading:

On March 16, 2015 an Agreed Statement of Facts was entered into and signed between Her Majesty the Queen and Canada Motor Car Inc. wherein, among other admissions, CMC admitted: (

a) They engaged in prohibited unfair practices as prohibited by

section 17 of the Consumer Protection Act ; (

b) They misrepresented rights and/or material facts in a manner that was “false, misleading and or deceptive”; and (

c) There were specific admissions with respect to the plaintiff. [ 19 ] The proposed amendments do not particularize the “specific admissions with respect to the plaintiff”. [ 20 ] I agree with the approach suggested by Master MacLeod in his April 2016 endorsement. I find that the proposed amendments are relevant to the motion for

summary judgment. In particular, the proposed additional substantive paragraph highlights the existence of the ASF and provides some, albeit limited, particulars of the admissions made by CMC in the OMVIC proceeding. The admissions made are relevant to the plaintiff’s claims against CMC. [ 21 ] I therefore determine the pleading motion first and the motion for

summary judgment second. Issue No. 1 - Is the plaintiff entitled to leave to amend her statement of claim?

a) The Test for Leave to Amend a Pleading [ 22 ] Rule 26.01 of the Rules of Civil Procedure provides that “[o]n motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.” [5]

b) Basis for the Proposed Amendments [ 23 ] The ASF is part of the record on the motion for

summary judgment; it is an exhibit to the plaintiff’s affidavit delivered in response to the defendants’ motion. The ASF is not part of the record on the pleading motion. The ASF is not included as an exhibit to nor is it mentioned in the only affidavit filed in support of the pleading motion (the “Barber affidavit”). The Barber affidavit is in the name of a clerk at the office of counsel for the plaintiff. [ 24 ] It would be unfair to the plaintiff to overlook the ASF because her counsel failed to include or refer to it in the record on the pleading motion.

The plaintiff is not to be prejudiced by that shortcoming on the part of her counsel. Therefore, on the pleading motion, I have considered the ASF and the plaintiff’s evidence with respect to the OMVIC proceeding (even though the document and evidence stem from the plaintiff’s affidavit in response to the motion for

summary judgment). [ 25 ] The plaintiff’s evidence is that CMC plead guilty to the charges laid against it in the OMVIC proceeding. The plaintiff does not provide any additional information with respect to the charges or the outcome of the proceeding—for example with respect to the latter, the penalty, if any, imposed. [ 26 ] The affidavits in support of the defendants’ motion are from each of the four individuals named as defendants in the title of proceeding and from Drolet, the latter in his capacity as the President of CMC. The affidavits were each sworn in July 2015.

Conspicuously absent from the affidavits is any mention of either the OMVIC proceeding or the ASF; this despite the fact that the ASF is dated March 2015. [ 27 ] The defendants did not deliver reply affidavits on the motion for

summary judgment nor did they deliver affidavits in response to the pleading motion. [ 28 ] The proposed amendments arise from a document that did not exist when the statement of claim was issued.

The proposed amendments provide further particulars of the outcome of the plaintiff’s complaint to OMVIC, addressing both aspects of the plaintiff’s claims—the alleged misrepresentations and the alleged violations of the CPA . [ 29 ] There is no evidence that the defendants will suffer any prejudice that cannot be compensated for in costs or an adjournment if the plaintiff is granted leave to amend the statement of claim. The defendants have not requested an adjournment nor have they requested costs in the event leave to amend the statement of claim is granted.

c) Summary [ 30 ] Pursuant to rule 26.01 of the Rules of Civil Procedure , the plaintiff is granted leave to amend the statement of claim as proposed. Issue No. 2 - Is there a genuine issue for trial?

a) Preliminary Matter - The ASF and the OMVIC Proceeding [ 31 ] I find it troubling that none of the affidavits filed in support of the motion for

summary judgment was mention made of either the OMVIC proceeding or the ASF and its contents. It is the plaintiff who, in her affidavit, addressed the ASF and the OMVIC proceeding. [ 32 ] Each of Bhattarai, Campagna, and Drolet were cross-examined on their respective affidavits. I also find troubling the manner in which questions posed by counsel for the plaintiff on the subject of the ASF were addressed by counsel for the defendants [6] : • On the cross-examination of Drolet, counsel for the defendants refused to permit Drolet to answer any questions posed of him with

respect to the ASF other than the following question: “Do you recognize this document?” Counsel for the defendants took the position that the ASF is irrelevant to the plaintiff’s action and refused to permit Drolet to answer twelve additional questions related to the ASF and the OMVIC proceeding. • On the cross-examination of Bhattarai, counsel for the defendants refused to permit Bhattarai to answer questions related to the admissions made by CMC in the ASF. [ 33 ] In contrast, when cross-examining the plaintiff, counsel for the defendants posed several questions to the plaintiff with respect to the OMVIC proceeding, including whether she was in attendance at the proceeding for the CMC plea of guilty. [ 34 ] The defendants cannot in any way be taken by surprise by the existence of the ASF or the plaintiff’s reliance on it.

The defendants must have appreciated that the ASF would be addressed as part of the documentary and oral discovery process. With copies of the document in the power, possession, or control of the plaintiff and CMC it would be included as a

Schedule “A” document in their respective affidavits of documents. [ 35 ] The plaintiff’s evidence is that as of the date on which she swore her affidavit, her counsel did not have a copy of the “contents of the OMVIC file”. The plaintiff speculates that “it may contain evidence relevant to those proceedings.” [ 36 ] In my view, the specific outcome of the OMVIC proceeding, including any penalty imposed, and copies of the transcript(

s) from the proceeding are relevant to this action. I anticipate that evidence in that regard would be of benefit to the trial judge in determining this action. I note, however, that examinations for discovery have not yet taken place. Presumably the subject of the OMVIC proceedings in their entirety will be addressed as part of the oral and documentary discovery process.

b) Motions for

Summary Judgment Generally [ 37 ] In Hryniak v. Mauldin [7] , the Supreme Court of Canada held that on a motion for

summary judgment under Rule 20, the court should first determine if there is a genuine issue requiring trial based only on the evidence in the motion record, without using the fact- finding powers enacted when Rule 20 was amended in 2010. The analysis of whether there is a genuine issue requiring a trial should be done by reviewing the factual record. The motion for

summary judgment may be granted if there is sufficient evidence to fairly and justly adjudicate the dispute and a

summary judgment would be a timely, affordable and proportionate procedure. [ 38 ] If, however, there appears to be a genuine issue requiring a trial, then the court should determine if the need for a trial can be avoided by using the powers under rules 20.04(2.1) and (2.2). As a matter of discretion, the motions judge may use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if their use will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole. [ 39 ] In determining the motion for

summary judgment, I have applied the principles from Hryniak .

c) Genuine Issues for Trial

i) Alleged False Statements and Misrepresentations [ 40 ] I am satisfied, based solely on the contents of the ASF filed in the OMVIC proceeding, that there is evidence to support of a finding that CMC made “false, misleading and deceptive representations about its credit rebuilding program” to each of thirteen individuals, including the plaintiff. I do not, however, make such a finding for the purpose of the balance of the action.

I do not do so in part because there is no evidence as to the substance of the representations. [ 41 ] It is difficult to reconcile the admissions made by CMC in the OMVIC proceeding, in particular as they relate to the plaintiff, with the evidence of Bhattarai, Campagna, and Drolet in their respective affidavits and on their respective cross-examinations.

Their evidence is that the credit re-building program, including the options available to the plaintiff at the end of the 10-month period, were clearly explained to her. [ 42 ] In light of their characterization of the substance of their discussions with the plaintiff, each of Bhattarai and Campagna are perplexed by the plaintiff’s evidence as to her understanding of the options available to her at the end of the 10-month period.

Bhattarai and Campagna are adamant that they in no way likened the 10-month period to renting a vehicle, which is the plaintiff’s understanding of how the program worked. [ 43 ] The defendants point to inconsistencies in the plaintiff’s evidence and in her pleading with respect to her purchasing a vehicle and her purported understanding that the credit re-building program included at least one option that was like renting a vehicle.

The plaintiff’s position is, however, that the statements and/or representations as to the terms of the credit-rebuilding program (i.e. the options available at the end of the 10 months) are secondary in the context of her claim. [ 44 ] The primary false statement and/or misrepresentation was in telling the plaintiff that she had to participate in the credit re- building program in order to obtain financing.

The plaintiff’s evidence is that through its employees, CMC represented to her that because she did not have a credit rating at all she would not be able to secure financing without participating in the credit re-building program. Relying solely on that representation, the plaintiff chose to participate in the credit re-building program and purchase the car on the terms set out in the Used Vehicle Bill of Sale. [ 45 ] I am satisfied, on the basis of the contents of the ASF and the plaintiff’s evidence, that there is a genuine issue for trial with respect to both the primary and the secondary misrepresentations.

Despite the extensive cross-examinations of Bhattarai, Campagna, Drolet, and Johnson, I am unable to resolve the issue by applying the fact-finding powers pursuant to Rule 20 of the Rules of Civil Procedure . I find that the credibility and reliability of the parties and the witnesses cannot be resolved on the basis of the documentary record alone.

ii) Violations of the Consumer Protection Act [ 46 ] Based solely on the contents of the ASF filed in the OMVIC proceeding, I am satisfied that there is evidence in support of a finding that CMC, in its dealings with the plaintiff, violated provisions of the CPA . I do not at this time make such a finding for the purpose of the balance of the action. [ 47 ] The ASF includes general descriptions of the violations of the CPA .

For example, at paragraph 15 of the ASF, CMC admits that: In offering the credit rebuilding program, and in selling motor vehicles to consumers, certain employees at Canada Motor Car violated the CPA . Specifically, between September 5, 2009 and April 15, 2012, they engaged in prohibited unfair practises as prohibited by

section 17 of the CPA . [ 48 ]

Part III of the CPA addresses “Unfair Practices”; it includes

section 17.

Part III includes other sections in which numerous unfair practices are described. For example,

section 14 of the CPA provides that “[i] t is an unfair practice for a person to make a false, misleading or deceptive representation.” [ 49 ] CMC admits at paragraph 18 of the ASF that it made false, misleading and deceptive representations about its credit rebuilding program to thirteen consumers, including the plaintiff, who are named in the ASF.

Once again, however, the particulars of the representations made are not provided. [ 50 ] In the absence of evidence of the particulars of the representations it is not possible to determine whether the representations made entitle the plaintiff to the damages claimed, if any damages at all. It is not possible to resolve this issue applying the fact-finding powers of Rule 20 of the Rules of Civil Procedure .

d) Summary [ 51 ] Without the benefit of hearing from the parties, I am unable to make the necessary findings of fact, apply the law to the facts, and achieve a fair and just adjudication of the case on its merits. The defendants’ motion for

summary judgment is dismissed. Other Matters [ 52 ] As I noted in the Overview above, this matter falls within the scope of the Simplified Procedure. A significant amount of time and resources were devoted to the motion for

summary judgment: • The cross-examinations of Bhattarai and Drolet took place in the Toronto area. Counsel for the plaintiff and for the defendants travelled from Ottawa to the Toronto area for the cross-examinations. In total they lasted approximately three hours. • The cross-examinations of Campagna and the plaintiff took place in Ottawa.

In total those cross-examinations lasted in excess of four hours. • Counsel for the parties were required to attend on the return of motions on three occasions (two dates in April and a date in June 2016). [ 53 ] The parties have yet to complete the exchange of pleadings and conduct examinations for discovery.

Examinations for discovery in a matter within the Simplified Procedure are limited in time to two hours per party. [8] The parties in this matter have already spent more than seven hours on cross-examinations (the scope of which approached an examination for discovery and exceeded the scope of cross-examination on the affidavits filed on the motion for

summary judgment). [ 54 ] The motion for

summary judgment was initiated in the fall of 2015. As a result of the time taken for cross-examinations, the responding pleading motion, and the time between the date on which the motions were heard and this Ruling, the progress of the action has been impeded. I apologize to the parties for the time I have taken in rendering my decision on the motions. [ 55 ] I do not want to see the progress in this action further delayed.

For that reason, in the disposition below I have set deadlines for the balance of the steps in the action. [ 56 ] I strongly urge the parties to consider the merits of their respective conditions, the economics of the litigation, and the potential for settlement through mediation. Disposition [ 57 ] I order as follows: 1. The plaintiff is granted leave to amend the statement of claim as proposed in the amended statement of claim included as exhibit “B” to the Barber affidavit sworn on April 5, 2016. 2. The defendants’ motion for

summary judgment is dismissed. 3. The plaintiff shall, no later than September 1, 2017 have the statement of claim amended by the Court. 4. The plaintiff shall, no later than September 8, 2017 effect service of the amended statement of claim on the remaining defendants in the action. 5. The balance of the steps in the action, from service of the statement of defence to the amended statement of claim to the completion of the documentary and oral discovery process shall be governed by the deadlines set out in the Rules of Civil Procedure .

6. Either the plaintiff or one or both of the defendants shall set the action down for trial within the 180-day period referred to in rule 76.09 of the Rules of Civil Procedure . Costs [ 58 ] In the event the parties are unable to agree upon costs of the plaintiff’s motion for leave to amend the statement of claim and the defendants’ motion for

summary judgment, they may make written submissions as follows:

a) The submissions shall be limited to a maximum of four pages, exclusive of a bill of costs;

b) Written submissions shall comply with Rule 4 of the Rules of Civil Procedure ;

c) Hard copies of any case law or other authorities shall be provided with the submissions and shall comply with Rule 4 of the Rules of Civil Procedure with respect to font size;

d) The submissions, the documents referred to therein, case law, and other authorities, shall be on single-sided pages;

e) Written submissions shall be delivered by 5:00 p.m. on the twentieth business day following the date on which this Ruling is released; and

f) In the event any party wishes to deliver a reply to the costs submissions of the opposing party, the reply submissions shall be delivered by 5:00 p.m. on the twenty-fifth business day following the date on which this Ruling is released. Reply submissions shall comply with paragraphs (

a) to (

d) above. _______________________________________ Madam Justice Sylvia Corthorn Released: August 18, 2017 CITATION : Johnson v. Canada Motor Car Inc. , 2017 ONSC 7772 COURT FILE NO.: 14-59801 DATE: 2017/08/18

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Suzanne Johnson Plaintiff/Responding Party – and – Canada Motor Car Inc. (2063882 Ontario Inc.), Ross Campagna, Roy Rashidpour and Ashish Bhattarai Defendants/Moving Parties RULING ON MOTION FOR

SUMMARY JUDGMENT Madam Justice Sylvia Corthorn Released: August 18, 2017