CITATION: MacQuarie Equipment Finance (Canada) Ltd. v. 2326695 Ontario Ltd. et al.

,
2019 ONSC 5019
COURT FILE NO.: CV-17-583582
DATE: 2019-08-28

SUPERIOR COURT OF JUSTICE - ONTARIO

2019 ONSC 5019 (CanLII)

RE: MACQUARIE EQUIPMENT FINANCE (CANADA) LTD., Plaintiff
AND:
2326695 ONTARIO LTD. operating as DURHAM DRUG STORE, Defendant
AND:
MEDVIEWMD INC., LEASECORP CAPITAL INC., and DANIEL NEAD,
Third Parties
BEFORE: Sossin J.
COUNSEL: Ron Aisenberg, Counsel for the Plaintiff
Amer Mushtaq, Counsel for the Defendant
Stephen Gaudreau, Counsel for Third Party, Leasecorp Capital Inc.
HEARD: July 16, 2019
REASONS FOR JUDGMENT

OVERVIEW

[1] The plaintiff, MacQuarie Equipment Finance (Canada) Limited (“MacQuarie”), brings
this motion for summary judgment under Rule 20.03(1) of the Rules of Civil Procedure, R.R.O.
1990, Reg 194 (“Rules of Civil Procedure”) against 2326695 Ontario Ltd., operating as Durham
Drug Store (“Durham Drug Store”).

[2] The third party defendant, Leasecorp Capital Inc. (“Leasecorp”), also brings a summary
judgment motion to dismiss the claim against it by the defendant, Durham Drug Store.

[3] The claims in this case concern an agreement between Durham Drug Store and the third
party defendants MedViewMD Inc. (“MedView”) and Daniel Nead (“Nead”), whereby
MedView and Nead agreed to supply Durham Drug Store with a telemedicine studio located
inside the pharmacy for the purpose of providing remote medical services to the public, and
increasing traffic to the drug store.

[4] Leasecorp, an equipment lease broker, connected Durham Drug Store with MacQuarie,
which provided financing and the lease of the telemedicine equipment.

[5] MacQuarie and Durham Drug Store entered into the lease for the telemedicine equipment
on February 10, 2016, and Durham Drug Store took possession of the leased equipment. The
duration of the lease was 60 months. Durham Drug Store made payments pursuant to the
agreement for almost a year. After 11 monthly payments, Durham Drug Store ceased making
payments and defaulted on the lease in February, 2017.
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[6] On September 28, 2017, the plaintiff issued its statement of claim (subsequently amended
in February, 2019), seeking the sum of $90,057.14 in damages, together with possession of the
leased equipment.

[7] On November 15, 2017, Durham Drug Store delivered its statement of defence and
counterclaim, claiming that it believed its contract was with MedView and Nead, not MacQuarie.

2019 ONSC 5019 (CanLII)

MedView and Nead never disclosed to Durham Drug Store that the promised remote
telemedicine services required regulatory approval, which had not been obtained, and as a result
services ceased being offered through Durham Drug Store in November, 2016.

[8] On September 4, 2018, Durham Drug Store issued a fresh as amended third party claim
against Leasecorp, Nead and MedView.

[9] On September 7, 2018, MacQuarie delivered its reply and defence to the counterclaim.

[10] On November 20, 2018, Leasecorp delivered its statement of defence, and on November
27, 2018, Durham Drug Store delivered its reply.

[11] The third party defendants MedView and Nead have not filed any materials in this
litigation, and have been noted in default.

FACTS

[12] The key facts in this action concern the discussions and actions leading up the signing of
the lease between MacQuarie and Durham Drug Store, in February, 2016.

[13] The first discussion, in November, 2015, involved Seinab Abdulaziz (“Abdulaziz”), the
pharmacist, officer and director of Durham Drug Store, and Nead, who attended Durham Drug
Store and introduced himself to Abdulaziz as a representative of MedView.

[14] Based on Nead’s proposal, Abdulaziz agreed to proceed with the telemedicine initiative,
and an agreement was reached in early February, 2016, as to the terms of the agreement.
According to Abdulaziz’s evidence, she believed her contractual relationship would be with
MedView.

[15] On February 8, 2016, Barry Johnston (“Johnston”), a representative of Leasecorp,

attended Durham Drug Store for purposes of completing a credit application in relation to the
lease of the telemedicine equipment. Johnston’s evidence is that he was contacted by MedView
and advised that Durham Drug Store needed financing for the lease of equipment.

[16] In her affidavit, Abdulaziz stated that she believed Johnston was a representative of
MedView and stated that he stated that he was “sent by MedView.” Johnston, in his affadavit,
stated that in his exchange with Abdulaziz that day, he identified MacQuarie as being the lessor
with respect to the equipment.

[17] Johnston and Abdulaziz together completed the credit application, and on February 9,
2016, the credit application was approved.
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[18] On February 11, 2016, MedView sent Abdulaziz an email attaching a written Master
Service Agreement (“MSA”) to be signed between MedView and Durham Drug Store and
indicated Johnston would return to sign the agreement.

[19] On February 19, 2016, Johnston did return to Durham Drug Store, but with the lease
agreement between MacQuarie and Durham Drug Store rather than the MSA. Abdulaziz’s

2019 ONSC 5019 (CanLII)

evidence is that she was busy that day, and so did not review the document in detail, believing it
to be a version of the MSA. She stated in her affidavit (at para. 23), “When Johnston arrived at
the defendant on February 19, 2016, I was working my regular shift at the pharmacy and was
attending customers. Johnston waited for a bit until I was free to see him. He asked me to sign
the paperwork, so that Medview could “deliver” the equipment to the defendant. I signed the
documents Johnston presented without thoroughly reviewing them. The whole meeting with
Johnston lasted a few minutes, when Johnston left and I went back to my work.”

[20] Abdulaziz acknowledges seeing “MacQuarie” on the agreement and not “MedView,” but
stated that she believed MacQuarie’s name was another business name for MedView.

[21] After Abdulaziz signed the document, Johnston left and had no further contact with
Abdulaziz, nor was Abdulaziz provided with a copy of the executed lease (until the dispute with
MacQuarie over payment on the lease arose in February, 2017).

[22] On February 19, 2016, the equipment was delivered to Durham Drug Store.

[23] The purchase price for the equipment was $86,120.77 (including tax), and under the
lease, Durham Drug Store agreed to make 60 monthly payments. Durham Drug Store made the
first 11 of these payments but did not make the monthly payment due on February 1, 2017
(within 5 days of its being due) and therefore became in default under the lease.

[24] On February 9, 2017, Valerie Borg (“Borg”) of MacQuarie contacted Abdulaziz to

schedule a call regarding the non-payment on the lease and a notice of demand.

[25] On February 10, 2017, Abdulaziz responded as follows: “I talked to Dan [Nead] & James
and they told me the [sic] are going to pick up the equipment from mid of January cause they are
aware I’m out of the Medview business … cause of can’t afford monthly payments … so please
come pick up your equipment as soon as possible…”

[26] Borg replied on February 13, 2017:

You should understand that Macquarie is not a part of this arrangement that
you have made with Dan [Nead]. However should Medview wish to
purchase the equipment, the sale should take place immediately as you are
currently in default of the lease. Any shortfall resulting from the sale of the
equipment to Medview, will be charged to you, the Lessee.

[27] That same day, Abdulaziz wrote back to Borg, asking “How did I get across of your
company, how did I have agreement & got in contact with Macquarie company without
Medview? … Default is not from my side default from running the system! Sorry I don’t have
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budgets to pay … agreement was running clinic to pay for services … you can come anytime to
pick up your equipment & solve the issue with Dan & James.”

[28] Borg provided Abdulaziz with a copy of the lease in a follow up email.

[29] The position of MacQuarie is that Durham Drug Store entered into a valid lease and is

2019 ONSC 5019 (CanLII)

now in breach and therefore liable for the damages sought under the terms of the lease.

[30] The position of Durham Drug Store is that it was the victim of a scam by the third party
defendants MedView and Nead. Further, Durham Drug Store takes the position that it was never
advised that it was contracting with any party other than MedView and Nead and therefore was
mistaken as to the identity of the party with whom it had contracted to finance the lease. Durham
Drug Store argues that it should not be liable for damages to MacQuarie under these
circumstances.

[31] The position of the third party defendant Leasecorp is that it had no knowledge of the
alleged, fraudulent scheme perpetrated by MedView and Nead, and that Leasecorp performed
only a peripheral role in the transaction by connecting Durham Drug Store with MacQuarie.
Leasecorp denies that it has any liability to Durham Drug Store or MacQuarie.

ANALYSIS

[32] The parties agree on the test for summary judgment under Rule 20.04(2)(a) of the Rules
of Civil Procedure. The question I must address is whether there is a genuine issue for trial.
There is no genuine issue for trial where, as set out by Karakatsanis J. in Hryniak v. Mauldin,
2014 SCC 7 at para. 66:

A judge is able to reach a fair and just determination on the merits on a motion for
summary judgment. This will be the case when the process (1) allows the judge to
make the necessary findings of fact, (2) allows the judge to apply the law to the
facts, and (3) is a proportionate, more expeditious and less expensive means to
achieve a just result.

[33] As the moving party, the plaintiff and third party defendant have the burden to show there
is no genuine issue for trial.

[34] Parties are required to put their “best foot forward” on a motion for summary judgment,
and cannot rely on the fact that additional evidence may be able to substantiate their position;
McPeake v. Cadesky & Associates, 2018 ONCA 554 at para. 11; and Mahoney v. Sokoloff, 2015
ONCA 390, at para. 5.

[35] The evidence in a summary judgment motion need not be equivalent to the evidence
available at trial, but the documentary record must be sufficient to fairly resolve the dispute.

[36] In this case, the parties all take the view that the record is sufficient to resolve this
summary judgment motion in their favour, although in the alternative, Durham Drug Store
argues that there are genuine issues for trial (though these are not specified in its factum).
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[37] While Durham Drug Store has not brought a motion for summary judgment, this Court
has the authority to grant judgment to the responding party on a summary judgment motion
whether or not a cross-motion is brought; Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R.
415, at para. 71.

[38] I am satisfied in this case that the record is sufficient to resolve the litigation.

2019 ONSC 5019 (CanLII)

[39] Given the terms of the signed lease are clear, the burden would rest with Durham Drug
Store at trial to establish the grounds on which the lease should not be enforced.

[40] Durham Drug Store raised an issue as to whether the lease was ever concluded, given that
it was not provided with a signed copy of the lease until the dispute over the default had
commenced. It is well accepted that at common law, an offer can be accepted by conduct where
the conduct was intended to do so, and where the conduct was not performed for another motive;
Heydary Hamilton PC v. Bay St. Documents Inc. 2012 ONCA 832 at para. 4. In this case,
Durham Drug Store’s acceptance of delivery of the equipment after the lease was signed
constituted its acceptance of the lease.

[41] Durham Drug Store primarily relies on the existence of a mutual or unilateral mistake to
argue that the lease contract between her and MacQuarie was never concluded.

[42] As set out in Wilde v. Wilde, 2000 CanLII 22544 (ONSC) (“Wilde”) at paras. 24-25, a
mutual mistake is to be assessed on objective grounds looking at whether a reasonable person in
the circumstances would decide that an agreement had been reached; while a unilateral mistake,
there is a subjective element to the standard, by which the party claiming to have been mistaken
may show the effect of that mistake in her or his own mind. As Linhares de Sousa J. observed in
Wilde (at para. 24), “if either [mutual or unilateral mistake] are found on the facts then the parties
cannot be said to have been of the same mind on the Agreement.”

[43] In Vigin G.F.R. Holdings Ltd. v. Kinder Care, 2018 ONSC 2429 at para. 152,
Shaughnessy J. confirmed that, “A mistake resulting in the end of a contract must be a
fundamental mistake, which—similar to a fundamental breach—undermines the contract’s entire
value.”

[44] Durham Drug Store submits that there is evidence in this case which supports the
application of the doctrine of mistake to these circumstances:

a. Durham Drug Store never contacted MacQuarie or Leasecorp in relation to the

lease;

b. Durham Drug Store at all times believed it was entering into a contract with
MedView alone;

c. Durham Drug Store reached its agreement on services and equipment at a

monthly fee with MedView;

d. MedView’s proposed MSA contained a contract for services and equipment

between MedView and Durham Drug Store;
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e. Johnston confirmed to Abdulaziz that he was “sent by MedView” and never

mentioned either Leasecorp or MacQuarie in the context of their conversations
about the lease;

f. Johnston never reviewed the terms of the lease with Abdulaziz or confirmed it
was different than the proposed MSA with MedView; and

2019 ONSC 5019 (CanLII)

g. Durham Drug Store was never provided with a copy of the lease which could
have alerted Abdulaziz to her mistake.

[45] In the Bank of Montreal v. Featherstone et al (1989), 1989 CanLII 4218 (ON CA), 68
O.R. (2d) 541 at 548, the Ontario Court of Appeal considered the unilateral mistake argument in
the context of a guarantee made by a spouse to support a loan application made by her husband
and his other partners. The spouse stated she did not know what she was signing, although she
knew about the loan. In the Court’s view, it would not be open to the spouse to “escape liability
merely because she did not take the trouble to read what she was signing.”

[46] A similar conclusion, in my view, applies in this case.

[47] Had Abdulaziz read the agreement carefully before signing it, she likely would have
connected the dots between the name MacQuarie, which she acknowledged seeing on the
document, as the source of the financing and equipment, and the contracting party on the lease.

[48] The failure to provide Abdulaziz with a copy of the lease, and the apparent failure of
communication between Johnston and Abdulaziz with respect to the various parties involved in
the transaction, and their roles, led to Abdulaziz’s understandable confusion and consternation
when eventually contacted by Macquarie in relation to the default on the lease agreement, but
this confusion and consternation does not vitiate the enforceability of the agreement.

[49] Abdulaziz received the equipment, and complied with the terms of the financing until the
alleged fraud perpetrated by MedView and Nead became apparent. That alleged fraud provides
Durham Drug Store with a claim against the alleged perpetrators, MedView and Nead, but does
not justify imposing losses on MacQuarie or liability on Leasecorp.

[50] The circumstances of this case may be distinguished from the case law on mistake,
reviewed by the Court of Appeal in Wilde (at paras. 28-32), where the negotiations between the
parties indicate a meeting of minds of certain terms which are then left out or changed by
mistake in the language of the final agreement. In this case, Durham Drug Store negotiated the
terms for the leased equipment and services and the lease reflected what had been negotiated.
Durham Drug Store, in other words, was bound by the terms of the agreement by which it
intended to be bound.

[51] While Abdulaziz appears to have been the victim of the fraud perpetrated by MedView
and Nead, there is no evidence that either Macquarie or Leasecorp participated in or knew about
the fraud. Whether either or both companies conducted the due diligence into the transactions
involving MedView and Nead that they could or should have is not the subject of this litigation.
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[52] Durham Drug Store raises the suggestion that perhaps Leasecorp and MedView engaged
in a coordinated strategy to obtain the lease between Durham Drug Store and MacQuarie, but
produced no evidence suggesting any concerted attempt to mislead Durham Drug Store. The
evidence Durham Drug Store relies on consists of email between MacQuarie and MedView
indicating mutual clients, as well as other shared clients in financial trouble.

2019 ONSC 5019 (CanLII)

[53] In my view, this evidence could not support a finding of fraud or fraudulent
misrepresentation, for which the threshold is high. Durham Drug Store relies on National
Leasing Group Inc. v. Graham, 2012 CanLII 102072 (ON SCSM), a Small Claims decision
involving a leasing contract between a party who was the victim of a fraud and a leasing
company seeking to recover unpaid funds under the lease. In that case, the victim of the fraud did
not know the terms of the lease. Martel D.J. held (at para. 78):

78. The question then arises as to whether or not CLE and National were
aware or willingly blind with respect to this fraud. The evidence of
National was very clear that it was not in the business of funding
locations. There is a web of deceit spun around this venture starting with
Javamax hiding the existence of one leasing company from the
other. Javamax in fact perpetrated a fraud on both National and CLE by
including the location price and other expenses in its invoice, leaving both
leasing companies in the position of financing not just equipment but
location, freight and other charges. Both leasing agreements therefore were
based on a fundamental misunderstanding of exactly what was being
financed. In this regard both leasing companies were as much victims of
fraud as was Graham. The leases were unfairly negotiated and based on a
contract between 685532 (Javamax) and Graham that I have rescinded.
Graham had no understanding of the terms of the lease at the time they were
executed. She was misled and pressured by Gelineault. The leases were
only approved based on an inaccurate credit application for which Graham
should not be held responsible. At every turn Graham was manipulated by
Gelineault and Equilease. The leases themselves are rescinded. (Emphasis
added.)

[54] In this case, Abdulaziz did understand the terms of the lease, and complied with those
terms until MedView’s alleged fraud became apparent.

[55] I find that the allegations of fraud and/or fraudulent misrepresentation against MacQuarie
and Leasecorp. are not supported by the evidence and do not give rise to a genuine issue for trial.

[56] Similarly, I find the allegations of negligent misrepresentation by Durham Drug Store
against MacQuarie and Leasecorp are not made out based on the record. The test for negligent
representation has 5 elements (Queen v. Cognos Inc., [1993] 1 S.C.R. 87, at para. 34):

a) There must be a “special relationship” between the person making the

representation and the party alleging misrepresentation;

b) The representation(s) must be untrue, inaccurate or misleading;

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c) The person making the representation must have been negligent;

d) The party alleging misrepresentation must have relied on the

misrepresentation; and

e) The reliance on the misrepresentation must have caused the party alleging

2019 ONSC 5019 (CanLII)

misrepresentation to suffer a loss.

[57] In this case, the element of a special relationship may have been present between
Leasecorp, as represented by Johnston and Abdulaziz, representing Durham Drug Store. A
special relationship exists when reliance by the party receiving the representation is both
reasonably foreseeable and reasonable in the circumstances.

[58] The evidence with respect to misrepresentations by Leasecorp, however, is lacking. The
account of Leasecorp’s relationship with Durham Drug Store does not amount to representations
that were “untrue, inaccurate or misleading.”

[59] Further, there is no indication of any special relationship or representations between

Durham Drug Store and MacQuarie leading up to the signing of the lease.

[60] Even assuming Johnston stated that he was “sent by MedView” as stated by Abdulaziz in
her affidavit evidence, this is consistent with MedView contacting Leasecorp to provide
brokering services and not consistent with an attempt to mislead Abdulaziz into believing she
was entering into a contract solely with MedView. While the email from MedView attaching the
MSA indicated Johnston would return to pick up the signed agreement, there is no evidence
Johnston was copied on that email, or was otherwise aware of MedView’s communications or
representations of his role.

[61] I find that the evidence in the record is not sufficient to give rise to a genuine issue for
trial for negligent misrepresentation.

[62] Finally, Durham Drug Store argues that it would be unconscionable to enforce the lease.
In order to establish an unconscionable contract, a party must establish the following:

a. A grossly unfair and improvident transaction; and

b. A victim’s lack of independent legal advice or other suitable advice; and

c. An overwhelming imbalance of power; and

d. A party knowingly taking advantage of the vulnerability of the victim.

[63] Abdulaziz believed she was entering into an agreement with mutual risk, under which if
MedView could not deliver the promised services, then Durham Drug Store would not provide
the monthly payments for those services. Abdulaziz argues that she never would have agreed to
enter into a third party leasing agreement in which she bore the entire risk if MedView could not
deliver the promised services. Further, Durham Drug Store asserts the equipment was worth no
more than $14,000.
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[64] The evidence in this case does not support the allegation that either MacQuarie or
Leasecorp knowingly took advantage of Abdulaziz’s vulnerability. Additionally, there is no
independent corroboration on the value of the equipment (or services) provided under the lease
that would establish the transaction was unfair or improvident.

[65] I find that the evidence in the record is insufficient to establish unconscionability.

2019 ONSC 5019 (CanLII)

[66] For the reasons set out above, I find that the lease is enforceable, and that there are no
genuine issues for trial.

CONCLUSION

[67] The motions for summary judgment by MacQuarie is granted and MacQuarie is entitled
to judgment in the amount of $90,057.13, together with pre-judgment interest, though in the
circumstances, I find it more appropriate to calculate this interest at the rate prescribed in the
Courts of Justice Act rather than the rate prescribed in the lease itself.

[68] Durham Drug Store’s counterclaim is dismissed.

[69] The summary judgment motion by Leasecorp is also granted and the third party claim
against Leasecorp is dismissed, though this does not preclude Durham Drug Store from
continuing its third party claim against MedView and Nead.

[70] If the parties cannot agree on costs, brief submissions may be provided to me within 30
days of this judgment.

______________________
Sossin J.

Date: August 28, 2019