IN THE SUPREME COURT OF NOVA SCOTIA
Citation: Bank of Montreal v. Scotia Capital Inc., 2002 NSSC 252
Date: 20021125
Docket: SH 171558
Registry: Halifax
Between:
Bank of Montreal
Plaintiff
-and -
Scotia Capital Inc./Scotia Capitaux Inc.
Defendant
Third Party Plaintiff
Third Party Counterclaim Defendant
- and -
Cathy Lewis
Third Party Defendant
Third Party Counterclaim Plaintiff
Judge: The Honourable Justice Walter R. E. Goodfellow
Heard: October the 28th, 2002 in Chambers, Halifax, Nova Scotia
Counsel: Alexander S. Beveridge, Q.C. , for Bank of Montreal
Alan V. Parish, Q.C., and Brian K. Awad, for Scotia Capital Inc.
David A. Copp, for Cathy Lewis
By the Court:
BACKGROUND
[1] The Bank of Montreal in its statement of claim May 18th, 2001 alleges that on October the 15th, 1996 Cathy Jean Lewis executed the first of three hypothecations as collateral for loans the Bank had made to a company in which her husband has an interest. Ms. Lewis had given guarantees to the Bank and the hypothecations were intended to provide a further level of actual security to the Bank of Montreal. The Bank received from Scotia Capital Inc. letters of undertaking acknowledging Ms. Lewis’ pledge to the Bank and containing essentially the same wording as follows:
- Not to permit the balance of the account to be traded below $60,000.
- To provide the Bank of Montreal with a copy of the account statement on a monthly basis.
- To pay to the Bank of Montreal $60,000. from this account upon written demand.
[2] The next letter of undertaking referred to $100,000.00 and the final letter of undertaking September the 17th, 1997 referred to $121,450.00.
[3] In each of the letters of undertaking the Bank acknowledges Ms. Lewis has pledged the specific amount contained in each of the letters and that the undertakings by Scotia were in consideration of her pledge.
[4] On February the 2nd, 2001, the Bank of Montreal advised the company in which Ms. Lewis’ husband had an interest that the direct indebtedness of the company was $59,712.80 plus per diem interest and that the Bank was giving notice of intention to enforce the security stating that the indebtedness was now due and owing and must be paid. A letter to this effect was sent to Ms. Lewis the same date by registered mail.
[5] Scotia viewed itself somewhat as being caught in the middle. It had provided statements with respect to Ms. Lewis’ investment accounts as related to the deposit by her in August of 1996 of $175,000.00. There followed a series of correspondence between the parties, the clear effect being that Ms. Lewis gave written instructions that Scotia was not in any way, shape or form to deal with her accounts, including the securities. When Scotia pointed out that she could change the composition of her securities to such things as guaranteed investment certificates, she responded with disdain. Scotia Capital took third party proceedings against Ms. Lewis and the pleadings are complete in that there is a defence to the initial claim, defence to the third party proceedings and counterclaims. The position of Ms. Lewis is captured in paras 29 and 30 of her affidavit sworn the 15th of October, 2002.
29. Following my signing of the initial guarantee and pledge agreement in the fall of 1996, I did not receive independent advice as to my rights or potential liabilities. I did not receive advice, and was not aware of, and did not consider rights which may exist under the terms of the guarantee or pledge agreement, or other law, to limit or terminate further liability under these documents, or to decline to execute additional document or seek reduced commitments, particularly as to the balance of the line of credit of ProInTek refinanced as a term loan and was substantially reduced in amount. I believe that I have been deprived of a fair and proper opportunity to protect my personal interests in these transactions and I assert that the conduct of the Bank of Montreal and Scotia Capital affords arguable defences to the claims against me in this proceeding. It is also my position that only by a full determination of the facts at trial can it be properly determined if the Bank of Montreal has a pledge right against my assets which is sufficiently certain to be an enforceable agreement.
30. In my filed defence, I have not admitted that the claim of the Bank of Montreal against ProInTek is justifiable, and have relied on all defences which may be open to ProInTek. Based on the facts as they appear, I assert that the Bank of Montreal acted unreasonably, without justification and contrary to the bridge financing arrangements which had been in place between Mike Steele and my husband. I further assert that it is arguable that the actions of the Bank of Montreal were undertaken not in good faith, but in furtherance of a corporate policy which was intended to terminate involvement of the Bank of Montreal with its smaller business accounts for novel technology companies, in this case by generating circumstances which would force ProInTek to default on its term loan payments and facilitate an immediate payout of its position through seizure of my investment account.
APPLICATIONS
[6] The Bank of Montreal seeks summary judgment against Scotia based on the letters of undertaking. Scotia seeks a summary judgment against Ms. Lewis for whatever it may be called upon by summary judgment to pay to the Bank of Montreal and, alternatively, Scotia seeks interpleader to pay into court and turn over the securities and accounts it holds which have been subject for some time to Ms. Lewis’ express written instructions of no trading or conduct.
FACTS NOT IN DISPUTE
1. The Third Party, Cathy Lewis, is a psychiatric rehabilitation worker employed with the King’s Regional Rehabilitation Centre.
2. Cathy Lewis’ husband is Andrew Lewis, a shareholder, president and director of ProInTek Systems Incorporated, a company which develops and markets high-speed electronic vision systems principally for the pulp and paper industry.
3. Cathy Lewis executed guarantees in relation to the Bank of Montreal financing provided to her husband’s company.
4. Cathy Lewis has never had any interest in ProInTek, nor is she an officer, director, employee of the company.
5. In August 1996 Cathy Lewis invested the sum of $175,000.00 personal savings with Scotia Capital.
6. In the fall of 1996 Cathy Lewis was requested by her husband to assist in the financing of ProInTek by making available a portion of her invested assets with Scotia Capital for further security for a line of credit with the Bank of Montreal.
7. She acknowledges she agreed to do so.
8. Cathy Lewis received from the Bank of Montreal documents and, before executing them, engaged a lawyer, Janet Morris, and acknowledges she understood that she was pledging with Scotia Capital for the line of credit of ProInTek and that the total amount involved was $60,000.00. She understood that this was a pledge.
9. In March 1997 her husband advised her the Bank of Montreal wanted her to sign additional documents for the line of credit of ProInTek and again she received documents from the Bank of Montreal, signed them, this time without bothering to obtain independent legal advice but she was aware that the forms included a pledge agreement. Ms. Lewis now takes the position that the pledge instrument drafted by the Bank of Montreal on this occasion renumbered the account and she did not notice the difference in the account number from the pledge agreement she signed in 1996.
10. In September 1997 her husband advised her the Bank of Montreal was sending further documents concerning her line of credit for ProInTek for her signature.
11. Ms. Lewis acknowledges she realized this contained a pledge agreement and that she decided not to obtain independent legal advice.
12. Ms. Lewis and her husband were concerned with respect to the “Y2K” problem and she converted her investment with Scotia to cash and once the “Y2K” issue had passed, she invested approximately $100,000.00 in an investment program labelled a pinnacle account.
13. Ms. Lewis advances as a fairly arguable defence an alleged failure by Scotia to report in compliance with what she says was the reporting, understanding or condition related to her continued investment and whether or not there is any dispute as to the facts relating to reporting will require an examination of the specifics in evidence which in themselves are undisputed; namely,
(a) Cathy Lewis signed the pinnacle investment policy statement the 21st of June, 2000. This document sets out clearly the allocation and the following specific portions of the document were acknowledged by Mr. Lewis in her evidence on these applications, namely:
Objectives
The portfolio’s primary investment objective for the funds managed in the Pinnacle Program is growth.
Asset Mix Policy
The mix of assets between equities and fixed income investments is a function of investment objectives, time horizon, and risk tolerance. The higher the equity component, the greater is the potential for short term fluctuation and the higher the long-term return potential. The larger the fixed income component, the greater is the potential for income and the possibility of a stable return.
Portfolio Construction
The success of each manager and/or the investor’s investment program is judged relative to a market-based benchmark. For example, equity fund may be measured against a benchmark of the TSE 300 index.
(b) Ms. Lewis acknowledged receiving her first quarterly summary as of December 31st, 2000 which stated that her portfolio since inception had minus 19.0 per cent. In addition, she was forwarded investment account statements, the first statement date July 2000 showed her investment of $100,000.00 had as of July 31st, 2000 a market value of $96,444.00. The next statement sent to her September 2000 showed her investment to have a market value of $95,315.00 as of September 29th, 2000. The next statement forwarded to her October, 2000 showed, as of October 31st, 2000, her investments were at $92,066.00 and her statement of December 2000 showed her investment, as of the 29th of December, 2000 down to $81,993.00.
14. As previously noted, the Bank of Montreal required the principal shareholders of ProInTek Systems and Mr. Lewis’ spouse, Cathy J. Lewis, to execute guarantees and they were executed on the 15th of October, 1996.
15. Cathy Lewis and Andrew Lewis having executed a guarantee for the indebtedness of the company in the amount of $60,000.00. This was followed by Ms. Lewis pledge of negotiable securities to the value of $60,000.00 then held by Scotia.
16. On March 31st, 1997 ProInTek Systems executed a further operating account agreement increasing the loan limit to $100,000.00.
17. On or about the 31st of March, 1997 Cathy Lewis and her husband, Andrew, executed a guarantee for the additional indebtedness, the guarantee being for $100,000.00. It is acknowledged by Cathy Lewis that this further guarantee was in addition to and not in substitution for the guarantee previously given.
18. The execution of the guarantee was followed by Cathy Lewis’ execution of
additional hypothecation pledging negotiable securities to the value of $100,000.00 held by Scotia.
19. After the execution of the additional hypothecation, Scotia acknowledges that they produced an undertaking to the Bank of Montreal that it would not permit the balance of the value of securities held and pledged to be traded below the $100,000.00 and to pay the Bank of Montreal that amount upon written demand. There is no denial by Ms. Lewis of the pledge given by Scotia to the Bank of Montreal.
20. On the 17th of September, 1997 ProInTek Systems executed a promissory note in favour of the Bank of Montreal in the amount of $21,450.00 and Cathy Lewis and Andrew Lewis executed a guarantee for the indebtedness in the amount of $21,450.00 followed by Cathy J. Lewis executing a further hypothecation of negotiable collateral of her securities to the value of $121,450.00 held with Scotia and a further letter of undertaking from Scotia. Ms. Lewis in her evidence acknowledged that it was her understanding that her pledge was in place in November 2002 and it is the presentation of the more comprehensive pledge in December that she says now permits her to take the position that her previous pledge was not binding.
21. In December 2000 Scotia Capital sought Ms. Lewis’ signature to a new updated pledge agreement. When she attended at the office of Scotia Capital she noted the new agreement was much more lengthy and more extensive than the previous pledge agreements signed by her and she was reluctant to sign for the reason stated in para 21 of her affidavit, “I was reluctant to sign, especially as I believe that ProInTek had significantly reduced its obligations to the Bank of Montreal, and this did not seem to be recognized in the new agreement”. She inquired what was wrong with the previous documents and received no satisfactory answer. Scotia wanted her to sign the new pledge agreement and indicated that she would not be able to deal with the account until she was so instructed. By this time there was bad blood and a lack of confidence or trust by Ms. Lewis in the competence and management of Scotia.
22. Cathy J. Lewis wrote to Scotia February the 8th, 2001 which included the following:
First, I have just received a statement as at December 31, 2000 showing the balance of my account approximately $81,900.00. You will recall that we transferred $100,000.00 into the Pinnacle Program in October 2000. Since that time, your business has managed the account as my trustee, and on my behalf. I have received very little information regarding the transactions on this account.
You will recall that this account was the subject of a pledge agreement to the Bank of Montreal. In fact, you have provided three undertakings to the Bank of Montreal recognizing this pledge agreement. These undertakings are dated October 21, 1996, September 17, 1997 and March 4, 1999 respectively. The most recent undertaking requires that the account maintain a balance in excess of $121,450.00.
In light of the circumstances, I am concerned about the management of this account. From the information that I have been provided, I can only infer that the value of my initial investment has been drastically reduced. Further, it appears that there has been a breach of the undertaking related to my pledge agreement to the Bank of Montreal. This may have placed some parties in financial peril.
Therefore, I request an immediate accounting of all activity that has been undertaken by you as my trustee in the management of this account. Please include copies of any pledge agreements or other security agreements that I have executed and which are in your possession. I also require a time when I may inspect the share certificates or any other related investment documents that you have acquired on my behalf. Further, I direct you to cease all activity related to this account of any kind whatsoever until such time as I direct you otherwise.
Second, you have verbally advised me that an internal policy change may have affected the validity of any security agreement that pledges this account. I have received no correspondence regarding this policy change and, as previously stated, this change may adversely affect the financial status of some parties. Therefore, please provide to me a copy of this policy change, as well as any correspondence that you have had with the Bank of Montreal advising of the change.
As I have not had the ability to review the policy yet, and do not know what implications this may have, I direct you to hold all funds in the account for me in trust only. No funds shall be removed from this account, or paid to any other party whatsoever for any reason whatsoever without my express written authority. This direction applies to any efforts by the Bank of Montreal to seek payment of their outstanding security.
In summary, no activity whatsoever is to be conducted on the aforementioned account until I “instruct”(sic) to do so. I will not be in a position to direct any activity until I have been provided with all of the documents requested.
Sincerely,
Cathy J. Lewis
23. Alan V. Parish, Q.C., solicitor for Scotia, wrote to Ms. Lewis April the 23rd, 2001 which set out the background and went on to state:
Since the amount in the Pinnacle account exceeds the demand by the Bank of Montreal, we would appreciate your advice as to how you wish your assets to be liquidated in order to satisfy the demand by the Bank of Montreal. Please contact us within five days of receipt of this letter. If we do not hear from you, or your solicitor, within that time, we will proceed to liquidate the account as we see fit in order to meet the demand by the Bank of Montreal.
If we do not receive your consent to proceed in this manner within the five days aforementioned, then we will place the money in court by way of an interpleader action and you or your solicitor will be able to make any arguments which you wish to the court if you intend to take the position that a valid pledge does not exist over those funds.
24. Ms. Lewis’ response in writing April the 27th, 2001 where she expresses her distress at the conduct of Scotia in acting with such dispatch to live up to its letters of undertaking to the Bank of Montreal and her direct response with respect to her wishes in relation to the account was:
I do not authorize any trading of that account except on my expressed written permission. I will hold Scotia McLeod responsible to the fullest extent of the law for any losses resulting from any trading not so authorized. I need hardly tell you that the markets have been very volatile lately. As a degree of recovery from previous dramatic losses is being experienced, the liquidation of equities is likely to result in extreme loss to the portfolio.
I appears from the position taken by Scotia McLeod that it is not acting as a faithful trustee in the protection of my interests, as it is bound to do, but is merely accommodating the interests of the Bank of Montreal. There is a bona fide dispute as to the existence and validity of pledge rights in favour of the Bank of Montreal. That matter should be resolved according to law and left for resolution before the courts without prejudicial and unjustifiable interventions by Scotia McLeod. I demand full notice of any interpleader proceedings initiated by Scotia McLeod.
25. In cross-examination, she indicated clearly that she was not happy with the pledge agreement as of November 2002 and she very clearly takes the position that the request and pressure by Scotia for a lengthier and more extensive pledge agreement somehow eradicated and nullified any obligation she had pursuant to the pledge agreement she acknowledged then existed.
26. Ms. Lewis received a further letter from Mr. Parish June the 21st, 2001 where he pointed out:
We note that the pledge is not only for the securities in account number 260-04306, but also all “renewals thereof, substitutions therefore, accretions thereto, all income therefrom and all proceeds thereof.
He went on further to say that for Scotia to resist the demand and claim of the Bank of Montreal would have an impact of driving up legal costs which he noted could be to her account.
27. Ms. Lewis promptly responded to Mr. Parish’s letter of June the 21st in writing June the 28th. She again repeats her position which is based upon the request for a more extensive pledge in December.
28. There is no denial of indebtedness by ProInTek to the Bank of Montreal and indeed, Ms. Lewis’ counsel acknowledged the existence of indebtedness in his summation on these applications.
29. The affidavit of Paul Lannan sets outs with particularity his view as to how the letters of undertaking between Scotia and the Bank of Montreal came into being. His evidence was that they were prepared at the request of Ms. Lewis, that the contents were reviewed, and that she in fact personally collected the letters from Scotia which is denied by Ms. Lewis. At the same time she admits knowledge of the pledging arrangement but now says it is limited to only one of her accounts at Scotia Capital and she readily recognized the pledge agreement in December 2000 was a much lengthier and a more extensive pledge agreement than the previous form she had executed. Her affidavit sworn the 15th of October, 2002 clearly indicates in para. 10 that she was advised in March 1997 by her husband that the Bank of Montreal wanted additional documents for the line of credit to the company and that she received and completed the prerequisite documents but states “I was aware that the forms included a pledge agreement, but I did not know specifically how these documents related to the earlier set from 1996". Once again, in September 1997, her husband advised her of the need for additional documents relating to the line of credit and that they required her signature and she states in para. 12 of affidavit, “As in March 1997, I realized that the documents included a pledge agreement, but there was no requirement that I consult a lawyer, and I did not do so”.
30. Scotia readily acknowledges its letters of undertaking to the Bank of Montreal and the limitations purported to have been placed on its ability to deal with the pledges ever since the letter of Cathy Lewis to Scotia of February the 8th, 2001.
CIVIL PROCEDURE RULES
(i) summary judgment
Scotia applies for summary judgment pursuant to Rule 13.
Rule 13.01 provides as follows:
13.01 Afer the close of pleadings, any party may apply to the court for judgment on the ground that:
(a) there is no arguable issue to be tried with respect to the claim or any part thereof;
(b) there is no arguable issue to be tried with respect to the defence or any part thereof; or
(c) the only arguable issue to be tried is as to the amount of any damages claimed.
Rule 13.02(k) provides that the court hearing the application may grant any order or judgment “as it thinks just”.
Rule 13.05 states that Rule 13 applies to counterclaims and third-party proceedings.
(ii) interpleader
Rule 50.01 provides as follows:
50.01 Where a person, hereinafter called the “applicant”, is sued or expects to be sued in respect of any property in his possession or under his control, or to the proceeds thereof, or receives a claim thereto, by or from two or more persons, hereinafter called the “claimants” making adverse claims thereto, and the applicant claims no beneficial interest in the property, the applicant may apply to the court for relief by way of interpleader.
Rule 50.04(1)(e) provides that the court hearing the application may “make such order as it thinks just”.
CASE LAW
[7] In Oceanus Marine Inc. v. Saunders (1996), 153 N.S.R. (2d) 267, Pugsley, J.A. stated at p. 269:
[15] The principles that govern Oceanus’ application for summary judgment were stated by MacDonald, J.A., in Bank of Nova Scotia and Simpson (Robert) Eastern Ltd. v. Dombrowski (1978), 23 N.S.R. (2d) 532; 32 A.P.R. 532, at p. 537 (C.A.):
“Rule 13 has its antecedents in Order 14 of the English Supreme Court Rules. As stated in the Supreme Court Practice (1996), Vol. 1, p. 136, the purpose of O. 14 is to enable the plaintiff to obtain summary judgment without trial if he can prove his claim clearly, and if the defendant is unable to set up a bona fide defence, or raise an issue against the claim which ought to be tried ...”
[16] All that was required of the Saunders to defeat the applications was to raise an arguable issue to be tried. The burden is not a heavy one, Lienaux et al v. Toronto-Dominion Bank (1995), 140 N.S.R. (2d) 156; 399 A.P.R. 156, at p. 158 (C.A.)
[20] It was, with respect, not the function of the chambers judge, on an application for summary judgment, to determine matters of fact or law which were in dispute. Matters of controversy should be left for resolution at trial. (Irving Oil Ltd. v. Jos. A. Likely Ltd. (1982), 42 N.B.R. (2d) 624; 110A.P.R. 624 (C.A.))
[8] In MacNeil v. Black (1998), 166 N.S.R. (2d) 127 (N.S.C.A.), Freeman, J.A. stated at p. 128:
[4] Justice Edwards considered that it was only necessary for him to determine whether there was an arguable issue, and “references must be made to the pleadings only”. With respect, this was in error. A court is not restricted to considering pleadings only in an application for summary judgment pursuant to Civil Procedure Rule 13.01.
[5] That provides a statutory basis for the receipt of affidavit or other evidence which is routinely considered in cases dealing with summary judgment.
[9] Further, at pp. 129-130, Freeman, J.A. stated:
[10] The threshold for showing the existence of a defence worthy of trial is not a high one, but the defendant has not met it. The standard pleading that the plaintiff stopped abruptly, without more by way of supporting facts, lacks an air of reality. It does not meet, nor suggest how the defendant hoped to meet, the plaintiff’s assertion that she had been stopped for 45 seconds. It was necessary for the defendant in his pleadings or by way of affidavit or other evidence to assert facts capable, if proven at trial, of rebutting the presumption that the collision resulted from his negligence. The bald statement in the pleadings does not disclose the existence of an actual or probable defence and cannot fend off an application for summary judgment.
[10] Cromwell, J.A. in Campbell v. Lienaux et al (1998), 167 N.S.R. (2d) 196 (N.S.C.A.) stated the following at p. 198:
[11] Not every admission entitles the opposite party to judgment. The admission must be clear, unequivocal and relate to matters the admission of which entitles the party to judgment: see rule 21.03 and Bank of Montreal et al v. Dombrowski (1977), 23 N.S.R. (2d) 532; 32 A.P.R. 532 (C.A.). Moreover, statements made by a party in evidence, or correspondence, must be examined in context and the party making the statements has the opportunity to explain or qualify them. In short, there was no obligation on the Chambers judge to first consider the statements on which the appellants relied without considering the context, the explanations and qualifications which the respondent placed before him. Indeed, it would have been wrong for the Chambers judge to have done so.
[11] In Royal Trust Corp. v. Begg, [1999] N.S.J. No. 45, Flinn, J.A. granting an appeal from a successful interlocutory application for summary judgment stated at pp. 5 and 6:
[22] As this Court said in Lunenburg County Press Ltd. v. Deamond (1977), 18 N.S.R. (2d) 689 at p. 691:
... We cannot say that there is not an arguable point presented by the defendant. We specifically refrain from commenting upon the strength or adequacy of the defence or of the claim. We are conscious, however, as a judge should be in dealing with an application of this sort, that summary judgment is a summary proceeding which should not be lightly granted so as to deprive a litigant of his right to have any bona fide case disposed of after full trial.
[12] Justice Flinn also referred to Oceanus Marine Inc. v. Saunders, above. Justice Flinn noted Mr. Begg was not represented by counsel and had prepared his own pleadings and concluded that Mr. Begg’s affidavit and admissions in the mortgagee’s pleadings satisfied the burden to demonstrate that there are arguable issues to be tried and the Court of Appeal struck the summary judgment.
[13] Plastics Maritime Ltd. v. Dixon’s Boatbuilders’ Ltd., [1999] N.S.J. No. 12. This case deals more with the test to be followed by the Court of Appeal in that it will not interfere with a discretionary order of a chambers justice unless wrong principles of law have been applied or a patent injustice would result. It did confirm the determination by Moir, J. that, although there was strong prima facie evidence by way of dishonoured cheques and admissions by the defendant, such were not conclusive and added that Justice Moir was not wrong in principle in exercising his discretion to dismiss the application because in his view there were issues to be tried.
[14] The Supreme Court of Canada has dealt with the matter of summary judgment but it must be noted that this arises out of an Ontario Court of Appeal determination and the Ontario Rule does not appear to be identical to that in Nova Scotia. The case is Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423, Iacobucci and Bastarache JJ. delivered the judgment of the court and said at p. 8:
III. Analysis
(1) Were the Conditions for Summary Judgment Met?
[27] The appropriate test to be applied on a motion for summary judgment is satisfied when the applicant has shown that there is no genuine issue of material fact requiring trial, and therefore summary [page 435] judgment is a proper question for consideration by the court. See Hercules Managements Ltd. v. Ernst & Young, [1997] 2 S.C.R. 165, at para. 15; Dawson v. Rexcraft Storage and Warehouse Inc. (1998), 164 D.L.R. (4th) 257 (Ont. C.A.), at pp. 267-68; Irving Ungerman Ltd. v. Galanis (1991), 4 O.R. (3rd) 545 (C.A.), at pp. 550-51. Once the moving party has made this showing, the respondent must then “establish his claim as being one with a real chance of success” (Hercules, supra, at para. 15).
[15] It seems that in Nova Scotia the burden on a party opposing summary judgement is not as heavy as in Ontario in that Nova Scotia Civil Procedure Rule 13 specifically references an arguable defence “no arguable issue to be tried” and the requirement in Ontario of establishing a claim with a real chance of success is a much higher threshold.
[16] I would like to make the general practice suggestion, bearing in mind that it is only a suggestion, that in applications for summary judgment, counsel are not required to inundate the court with lengthy briefs and copies of a huge volume of cases. This was not done in this case and I commend counsel. I take the opportunity to express this view because often we end up with a veritable mountain of cases as it appears that just about every justice in this court has seen fit to write a decision on this subject and, from my perspective, the recent Court of Appeal decisions referred to are more than adequate as they clearly and comprehensively set out the law.
ARGUMENTS - CONCLUSION
[17] Briefs were filed by all parties and at the conclusion of the hearing all parties addressed the court.
[18] There is no dispute between the Bank of Montreal and Scotia as to the obligation of Scotia and the Bank of Montreal is entitled to summary judgment for the amount outstanding limited only by the amount contained in the last letter of undertaking.
[19] Whether or not Scotia is entitled to summary judgment against Cathy Lewis requires addressing the further issues raised by her counsel in argument.
[20] Mr. Copp raises as a fairly arguable defence that the pledge agreements relate solely to “securities” and that as the securities were changed from stock shareholdings to cash, that somehow the pledge agreement was rendered a nullity or released Cathy Lewis from the clearly established intent which was clearly carried out to make available the holdings in her account with Scotia as security by way of pledge. She understood the need to make a pledge of such security beyond the guarantees she executed and this understanding came from her husband. Cathy Lewis wishes now to take the position that cash was not a part of her pledge of additional security. This is an argument but surely the mere fact a person opposing summary judgment raises an argument does not of itself reach the threshold, albeit it an extremely low threshold, as directed by our Court of Appeal, of an arguable issue. Saying something does not, by itself, establish it. Mr. Copp was unable to submit any case law or authorities for this proposition. The evidence contained in the pleadings, documents and affidavits leaves one with an inescapable unequivocal conclusion that her support of her husband’s business endeavour was total and complete and constituted guarantees and the posting of her holdings with Scotia limited only to the clear amount pledged, of which she had unequivocal knowledge each and every time it was raised.
[21] Mr. Copp and particularly Ms. Lewis takes the position that she somehow placed a limitation on her holdings being available as security for the indebtedness created by advancing funds to her husband’s company other than the ceiling placed upon the security holdings by increasing letters of undertakings and pledges. There is nothing to support this to the limited threshold required. Ms. Lewis argues the Pinnacle account was to be excluded or immune from her pledges but the evidence in its entirety is totalling to the contrary and we have in fact her clear written statement in her letter of February the 8th, 2001 “you will recall that we transferred $100,000.00 into the Pinnacle Program in October 2000" ... “You will recall that this account was the subject of a pledge agreement to the Bank of Montreal. In fact, you have provided three undertakings to the Bank of Montreal recognizing this pledge agreement. These undertakings are dated October 21, 1996, September 17, 1997 and March 4, 1999 respectively. The most recent undertaking requires that the account maintain a balance in excess of $121,450.00".
[22] Mr. Copp and in particular Ms. Lewis takes the position in that the contractual relationship with Scotia, both written and verbal, was a requirement of keeping her informed and in particular that she was to be notified as and when the account diminished by ten percent value or more. It is not established that reporting, as alleged by Ms. Lewis, was in anyway a condition, let alone a fundamental condition of her contractual relationship with Scotia, but, in any event, all of the evidence before me clearly establishes that if it was such, it has been complied with by the quarterly statements and monthly statements provided to her and set out specifically in para 13 of the facts not in dispute.
[23] Finally, Mr. Copp in his representations indicates that he feels some confidence that, by proceeding to discovery, Ms. Lewis will be able to uncover arguable issues and defences. There may be circumstances where it is appropriate to conclude an application for summary judgment is premature when there is an indication, at least in a very limited way supported by the circumstances, that the discovery, either oral or often more likely of documents, stands a possible opportunity to confirm an allegation. However, CPR 13 does not have as a prerequisite the conclusion of a discovery or discoveries automatically and I find nothing that even begins to point me in the direction that it would be appropriate and reasonable to delay this application. Scotia has established very clearly their case and Ms. Lewis has failed to meet the extremely low threshold of establishing an arguable issue.
[24] I repeat that the mere allegation that an arguable issue exists does not meet the low threshold of establishing an arguable issue, otherwise Civil Procedure Rule 13 would be rendered a nullity in all claims where a denial defence is filed.
RESULTS
1.The Bank of Montreal is entitled to summary judgment against Scotia the amount outstanding including per diem interest to an inclusive of this date, the 25th of November, 2002.
2. Scotia is entitled to a summary judgement against Cathy Lewis for the amount of judgment of the Bank of Montreal against it.
3. Had I not determined Scotia has met the requirements for a summary judgment, I would have allowed Scotia’s application for interpleader.
4. All parties are entitled to be heard on the issue of costs and I would direct that the Bank of Montreal provide its position on costs and disbursements sought on or before the 2nd of December, 2002 with Scotia Capital to respond and provide its position on costs and disbursements on or before the 9th of December, 2002 with Cathy Lewis to have until the 16th of December, 2002 to respond to the costs and disbursements being sought.
5. The Bank of Montreal and Scotia Capital will be entitled on calculation of the amount of indebtedness to judgment, however, I issue a stay on any execution to give Ms. Lewis an opportunity to determine whether and to what extent she wishes liquidation of the holdings and account being held by Scotia. The entry of judgment will permit Scotia Capital to be in a position to issue execution against the holdings which shall remain in their possession until Ms. Lewis advises the court as to her position with respect to liquidation. Her position with respect to liquidation is to be advanced forthwith and any of the parties are entitled to apply for the immediate lifting of the stay portion of the Order to be granted. I sincerely hope that Ms. Lewis has already addressed the liquidation of her holdings, as the court does not wish to get into determining when holdings should be sold in the market, however, if necessary, the court is compelled to establish a deadline which would then permit Scotia, if its judgment is not satisfied, to issue execution.
[25] I wait the Order and representations on costs.
J.