Kerr v. Kerr, 2012 ONSC 4815
RE: ROBERT KERR, Plaintiff
- and –
PATRICIA KERR, Defendant
BEFORE: JUSTICE ABRAMS
COUNSEL: DONALD R. GOOD for the Plaintiff
JOHN PARR TELFER for the Defendant
 This motion was brought by the Defendant, Patricia Kerr (“Ms. Kerr”), seeking summary judgment. In the alternative, Ms. Kerr asks for an Order for security for costs.
 The Plaintiff, Robert Kerr (“Mr. Kerr”), is a farmer who farms in Lanark County.
 Ms. Kerr resides in Ottawa. She has suffered from cerebral palsy since birth. As a result, she lived with her parents until the death of her father in 1994, followed by the death of her mother in 1995.
 The parties are cousins. Following the death of her parents, Ms. Kerr received an inheritance. Thereafter, Ms. Kerr loaned Mr. Kerr funds to assist him with his farming operation when he was experiencing financial difficulties.
 Ms. Kerr initially loaned Mr. Kerr the sum of $70,000.00, which was secured by way of a mortgage on Mr. Kerr’s vacant farm property located at Part of Lots 12 and 13, Concession 5, Township of Bathurst, County of Lanark, as instrument no. 166760 on June 20, 1995 (“the subject property”). The mortgage provides that Mr. Kerr would pay interest in the amount of 8.65%. Mr. Kerr contends, however, that Ms. Kerr waived the interest payments owing under the mortgage.
 Subsequently on May 5, 1997, another mortgage for $80,000.00 was registered against Mr. Kerr’s property located at Part of Lot 11, Concession 3, Township of Bathurst, County of Lanark, as instrument no. 1833308 (“the Christie Lake farm”).
 Part of the mortgage on the Christie Lake Farm was comprised of interest payments that Ms. Kerr contends are owing to her on the mortgage taken out on the subject property. Accordingly, to the extent that Mr. Kerr was operating under any misapprehension that Ms. Kerr had agreed to waive the interest payments owing under the initial mortgage, by May of 1997 Ms. Kerr’s position ought to have been made clear. And, admittedly, Mr. Kerr acceded to the amount of the second mortgage because he needed the funds to continue to operate his farm.
 In addition to the funds advanced with regard to these two mortgages, Mr. Kerr obtained further unsecured loans from Ms. Kerr, which by October, 2000, amounted to $116,500.00.
 Ms. Kerr brought a claim against Mr. Kerr in Court file no. 00-CV-15715 in the Superior Court of Justice in Ottawa. The claim related to the unsecured loans. The claim went undefended. As a result, Judgment against Mr. Kerr for the full amount of the unsecured loans was entered on December 21, 2000, in the amount of $129,541.38 and costs of $423.00.
 A writ of execution was filed in relation to the Judgment debt. Two attempts were made to sell Mr. Kerr’s properties by the Sheriff of Lanark County, both of which were unsuccessful. Ms. Kerr paid the Sheriff a total amount of $11,617.69 in relation to the aborted attempts to sell the properties, but recovered nothing.
 Following the two failed Sheriff’s sales Ms. Kerr instructed her solicitors to stop spending money in attempts to recover the Judgment debts and to sell the subject property by way of power of sale.
 The subject property was listed for sale on February 26, 2007 at $89,900.00 and was sold on March 30, 2007 for $91,900.00.
 The subject property consisted of 197 acres of land and a barn.
 On November 10, 2008, Mr. Kerr commenced this claim against Ms. Kerr alleging, inter alia, an improvident sale of the subject property.
Positions of the Parties in the Main Action
 Mr. Kerr contends that the sale of the subject property under the Power of Sale provisions was improvident for reason that Ms. Kerr breached her duty to take reasonable precautions to obtain the true market value of the property at the date of sale.
 As evidence of the alleged breach, Mr. Kerr points to a list of duties that he says Ms. Kerr should have considered during the power of sale procedure, specifically:
(i) Did Ms. Kerr act bona fides in the exercise of the power of sale?
(a) Mr. Kerr contends that during the time that Ms. Kerr had commenced the power of sale proceedings, her solicitor, Mr. Telfer, visited with him at his home and gave him advice about what he could do to resolve the situation. In the circumstances, Mr. Kerr believed that Mr. Telfer was acting as his solicitor. Accordingly, Mr. Kerr contends that this conduct constitutes bad faith. Notably, in the material before the Court, Mr. Kerr’s contention regarding Mr. Telfer’s attendance at his home, in the circumstances described, stands alone, uncontested.
(ii) Was fair market value obtained and was a proper appraisal completed?
(a) Mr. Kerr contends that the appraisals used by Ms. Kerr to support market values in a range of $68,000.00 to $88,000.00 were dated as of December 2003 (“the Rivington Appraisals”). However, the period in which Ms. Kerr was exercising her rights under the power of sale was 2007. Further, no updated appraisal was obtained to established market value as at 2007.
(b) In contrast, Mr. Kerr retained Mr. David Enns, a member of the accredited appraiser Canadian Institute to provide a retrospective appraisal of the subject property as at March 30, 3007. The Court has before it, on this motion, Mr. Enns’ 41 page report dated October 25, 2011. The report concludes that the estimated market value, at the material time, based on a direct comparison approach was $164,000.00. Moreover, Mr. Kerr points to the fact that Mr. Enns had previously appraised the subject property in November of 1991 and estimated a value of $107,000.00, which is also greater than the 2003 Rivington appraisals.
(c) Following an adjournment of this motion in the fall of 2011, Mr. Enns’ report was served and filed. Firstly, no report has been served by Mr. Kerr in reply to Mr. Enns. Secondly, Mr. Enns has not been cross examined on his Affidavit, sworn November 2, 2011, in which he expresses his opinion of value for the subject property and the methodology used in preparation of the Report. Moreover, his appraisal reports of November 27, 1991 and October 25, 2011, are appended as exhibits to his sworn Affidavit on this motion. Mr. Enns was served with a Notice of Examination returnable at a reporting service in Ottawa. However, Mr. Enns resides in Cornwall and, as the Rules of Civil Procedure provide, he is entitled to be examined in the County in which he resides. That being the case, Ms. Kerr declined to have Mr. Enns cross examined for purposes of this motion. Accordingly, Mr. Enns’ sworn affidavit and the reports appended thereto are unchallenged, for the purposes of this motion.
(d) More troublesome is the fact that Ms. Kerr has put before the Court reports that could not be tested under cross examination in preparation for the motion. The Rivington appraisals are appended as exhibits to the Affidavit of the solicitor David Cameron Stevens. However, the affidavit of the listing agent, Joanne Bennell, asserts that she relied on these appraisals in coming to her decision regarding the listing price. Mr. Kerr contends that the Rivington appraisal ought to have been appended to an Affidavit sworn by Colleen Hall-Clark, the valuator who was retained by Ms. Kerr to prepare the report. In this way, Ms. Hall-Clark would be available for cross-examination as to the methodology that she employed in arriving at the listing price adopted by Ms. Bennell, which Mr. Kerr’s solicitor, Mr. Stevens relied upon.
(e) Mr. Kerr further contends that where a material issue in a case requires supporting evidence which is not within the ordinary knowledge or experience of the trier of fact, there is a need for expert evidence. Moreover, determining the price of property is not within the ordinary person’s knowledge and experience. To that end, Mr. Enns report and his affidavit were served for the purpose of responding to the motion for summary judgment. To recall, Mr. Enns was available for cross examination on his Affidavit and the accompanying report, had Ms. Kerr chosen to do so in accordance with the Rules.
(iii) Were Mr. Kerr’s interest taken into account?
(a) Mr. Kerr contends that no consideration was given to his interests as the mortgagor. The subject property was an essential part of his farming operation. Further, the sale of the subject property resulted in severe and lasting consequences to his personal and professional finances. In effect, the failure of Ms. Kerr to obtain fair market value of the subject property left a deficiency that has continued to accrue interest.
(iv) Was the property properly advertised?
(a) Mr. Kerr contends that the only evidence proffered by Ms. Kerr regarding the marketing of the subject property is set out in the Affidavit of Joanne Bennell, wherein she states that the property was listed for sale on MLS. No other evidence was put forward to show that there was advertising in place in terms of newspaper listings, signage and the like. Indeed, the first that Mr. Kerr learned of the sale was when a hand painted “sold” sign was put up on the fence following the sale.
(b) Mr. Kerr further contends that Ms. Kerr provided no documentation to the explain how the proceeds of sale were applied to the outstanding mortgage, real estate fees, solicitor’s fees and, in particular, the earlier cost award ordered against him. Accordingly, Mr. Kerr asserts that Ms. Kerr should be precluded from obtaining summary judgment when her actions have not been transparent in terms of providing documentation to show how the monies were applied, particularly in circumstances where she has now brought a claim for deficiency related to the Power of Sale proceedings.
(c) In summary, Mr. Kerr contends that it is not plain and obvious that he could not succeed with his claim. Rather, the complexity of the issues in this matter warranted a trial.
 Ms. Kerr contends that the only material facts at issue on this motion are:
1. Whether her solicitors acted reasonably and in good faith when they listed and sold the subject property; or
2. Whether the appraisals obtained by the solicitors were wrong and the true value of the property so exceeded the appraisals that the solicitors knew or ought to have known that the appraised value was not reasonable. 
 With respect to the first issue, counsel for Ms. Kerr asserts that Sedgwick, J.’s decision in Lay v. 1222055 Ontario Inc. is the seminal authority regarding the duty of a mortgagee acting under a power of sale. As that case and others before it have held:
“The mortgagee has a duty to take reasonable precaution to obtain the true market value of the mortgaged property at the date on which he decides to sell it. No doubt in deciding whether he has fallen short of that duty, the facts must be looked at broadly and he will not be adjudged to be in default unless he is plainly on the wrong side of the line”. (emphasis added)
 To that end, Mr. Telfer submits that on this motion the court should be satisfied by considering the appraisals and the opinion of the real estate professionals that the solicitor acted reasonably and in good faith. The sale was not improvident.
 With respect to the second issue, Mr. Telfer submits that the value of the subject property, as determined by the appraisal that the solicitor be relied upon, is not determinative, but if it were to be considered material, no trial would be required to determine that the appraisals was reasonable.
 With respect to whether Ms. Kerr acted bona fides in the exercise of the power of sale, nowhere in her evidence did she rebut the contention that Mr. Telfer attended at Mr. Kerr’s home and gave him advice about how he should resolve the situation. Moreover, nowhere in her evidence was Mr. Kerr challenged or contradicted as to his belief that Mr. Telfer was actually acting as his solicitor, at the material place and time.
 With respect to Mr. Kerr’s duty to take reasonable precautions to obtain the true market value of the subject property, Mr. Enns’ affidavit and accompanying reports create sufficient doubt as to the accuracy of the Rivington appraisals to warrant a trial. Firstly, the Rivington appraisals were approximately 4 years old by the time that Ms. Kerr decided to exercise her rights under the power of sale. Secondly, no reply report was served in response to Mr. Enns’ appraisal. Thirdly, Mr. Enns was never cross examined on his Affidavit in advance of the motion, as Ms. Kerr was entitled to do, in order to resolve any differences between the competing appraisals. For example, rather than speculating why Mr. Enns’ 1991 appraisal of $107,000.00 exceeded the 2003 Rivington appraisals, the question could have been put to Mr. Enns. Fourthly, the manner in which the Rivington appraisals were appended to the Affidavit of the solicitor, David Cameron Stevens, effectively precluded Mr. Kerr from testing the veracity of the appraisals to determine whether they were reasonable. There ought to have been an affidavit from Colleen Hall-Clark, the actual valuator, upon which Mr. Kerr may have cross-examined as part of the process of preparing to resist the motion for summary judgment. Fifthly, while the fact the subject property sold within 5 days during the winter, in Lanark County may suggest that advertisement solely through MLS was sufficient, it might equally suggest that it was listed at a “fire sale” price, which was patently obvious to the purchaser. Moreover, the fact that Mr. Kerr only became aware of the sale when a sold sign was hung on the fence is troubling. Finally, Ms. Kerr has brought a claim for deficiency related to the Power of Sale, without ever producing any particulars as to how the sale proceeds have been applied to date. In the face of the counter claim, it seems axiomatic that the two Actions must be tried together in order to come to a just result.
 Subsequent to the amendments to Rule 20 of the Rules of Civil Procedure, a Judge on a summary judgment motion may now weigh evidence, evaluate the credibility of a deponent and draw any reasonable inference from the evidence. That being said, the Judge is still required to answer the ultimate question of whether a trial is required to resolve a genuine issue.
 With respect to Ms. Kerr’s claim for summary judgment, the difficulty in granting the relief requested arises from the evidentiary gaps in her materials before the Court. Ms. Kerr has not explained why Mr. Kerr was wrong to believe that Mr. Telfer was acting as his solicitor leading up to the Power of Sale proceedings. Ms. Kerr has not explained why she instructed her solicitor to exercise the Power of Sale based on apparently stale appraisals. Ms. Kerr could have instructed her counsel to cross examine Mr. Enns on his affidavit to resolve any differences between the competing appraisals, but chose not to for the purposes of this motion. Moreover, whether it was a matter of strategy or mere inadvertence, the manner in which the Rivington appraisals were put before the Court:
(i) Precluded Mr. Kerr for cross examining on their veracity; and
(ii) Precluded the Court from weighing properly tendered evidence, assessing the credibility of the proper deponent, Colleen Hall-Clark, and drawing inference of fact as between the competing appraisals.
 For all of these reasons, the motion for summary judgment is dismissed.
Security for Costs
 In the alternative, Ms. Kerr claims security for costs in accordance with Rule 56.01. Having regard to the list of grounds enumerated in the Rule, it does not appear that:
(a) Mr. Kerr is ordinarily resident outside Ontario. Indeed, it is clear that Mr. Kerr resides and farms in Lanark County;
(b) Mr. Kerr has another proceeding for the same relief pending in Ontario or elsewhere;
(d) Mr. Kerr is a nominal plaintiff, and there is good reason to believe that he has insufficient assets in Ontario to pay the costs of Ms. Kerr. Rather, there is evidence that Mr. Kerr continues to operate the Christie Lake farm, however, there is no evidence before me regarding the equity he has in that asset, if any;
(e) The action is frivolous and vexatious for the reasons set out above; and
(f) A statute entitles Ms. Kerr to security for costs.
 The only remaining ground is 56.01(1)(c), which provides:
“The defendant or respondent has an Order against the plaintiff or applicant for costs in the same or another proceeding that remain unpaid in whole or in part.”
 There is evidence before the Court that Mr. Kerr was ordered to pay Ms. Kerr $423.00 in costs arising out of a judgment, dated December 21, 2000. However, there is no evidence as to whether or not the cost Order was satisfied as a result of the proceeds that were realized from the Power of Sale. Presumably it would have been easy enough for Ms. Kerr’s counsel to explain how the proceeds of sale were applied to the outstanding mortgage and other related fees, including the Order for costs. The solicitor, David Cameron Stevens, must have had that information available when he swore his Affidavit, dated August 31, 2011. However, as counsel for Mr. Kerr aptly pointed out, Ms. Kerr did not bring the motion for security for costs for almost three years following the commencement of this Action. The unpaid costs complained of arise out of a 2000 judgment. If indeed they remained outstanding as of the date of this Action, nine years later, query why the issue of costs was never raised until the fall of 2011, when this motion was commenced.
 Based on the evidence before the Court in this motion and for the reasons articulated above, I am not persuaded that Ms. Kerr can fit her claim for security for costs within Rule 56.01(i)(c), which is the only apparent enumerated ground that would apply. Accordingly, it is unnecessary to move on to the second question as to what Order for security for costs may be just in the circumstances of the case. In summary, the motion for security for costs is also dismissed.
 Costs of this motion are reserved to the Judge hearing the trial.
DATE: August 17, 2012
 Paragraph 3 Defendant’s Factum (Moving party on motion for summary judgment).
 Lay v. 1222055 Ont. Inc., 2005 CanLII 30865 (ON SC), 2005 CanLii 30865 (ONSC) at para. 30
 See Sutton v. Hospitality Equity Corp.,  O.J. No. 1071
 Irving Ungerman Ltd. v. Galanis reflex, (1991), 4 O.R. (3d) 545 Aronowicz v. Emtwo Properties Inc.,  O.J. No. 475