ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
ARLENE KEANE
Jacob Stilman, for the Appellant
Appellant (Defendant)
- and -
LINDA POPERT
Jonathan De Biasi, for the Respondent
Respondent (Plaintiff)
HEARD: March 29, 2019, at Brampton
REASONS FOR JUDGMENT
[On appeal from a Decision of Deputy Judge S. Richardson of the
Small Claims Court at Brampton, delivered April 16, 2018]
KUMARANAYAKE J.
1This is an appeal of the Judgment of Deputy Judge S. Richardson of the Small Claims Court. The Deputy Judge heard the trial on October 6, 2017 and January 9, 2018 and gave Reasons for Judgment on April 16, 2018. The Deputy Judge awarded Judgment in favour of the Respondent (Plaintiff) in the amount of $25,000, and awarded court costs and costs of $500 to the Respondent (Plaintiff).
2By her Notice of Appeal, dated May 8, 2018, the Appellant (Defendant) requests that the finding of liability for the sum of $25,000 be set aside and that the Appellant (Defendant) be found not liable for any portion of this amount.
3The Appellant (Defendant) has set out the following grounds of appeal:
That the learned Deputy Judge erred in law, or in mixed fact and law, in concluding that the sum of money given by the Respondent (Plaintiff) to the Appellant (Defendant) was not a contingent loan;
That the learned Deputy Judge erred in that she disregarded or misconstrued certain aspects of the evidence at trial, which demonstrated that the funds advanced by the Plaintiff to the Defendant were repayable to her contingent on the issuance of a loan by a purported third party lender; and
That the learned Deputy Judge erred in law in that she applied a purely subjective test in determining whether the funds advanced by the Plaintiff to the Defendant constituted a loan and failed in so doing to consider objective factors which demonstrated that repayment on the funds was contingent on a loan being advanced by a third party.
For the reasons below, I dismiss the appeal.
BACKGROUND FACTS
Nature of Dispute
4For ease of reference, I will refer to the Appellant (Defendant) as Ms. Keane and the Respondent (Plaintiff) as Ms. Popert. Ms. Keane and Ms. Popert are sisters. Ms. Keane lived with their elderly mother. The sisters learned that their mother was diagnosed with colon cancer. Their mother had outstanding debts. Ms. Keane had outstanding debts. Ms. Keane, trying to manage these debts while also looking after their mother, attempted to obtain a loan from her bank to consolidate the debts. However, she was declined. This litigation arises as a result of Ms. Keane borrowing money from Ms. Popert and then not repaying Ms. Popert.
5Ms. Keane found what she thought to be a legitimate way to obtain money to pay off debts. She made inquiries and found a company named Allied Capital Financial ("ACF") which she thought would be able to extend a loan that would cover the outstanding debts. However, in order to obtain the loan, Ms. Keane had to first provide funds to ACF. She did not have the necessary funds, so she turned to her sister, Ms. Popert.
6It is not disputed that on January 14, 2016, Ms. Keane asked her sister for $2,500 in order to secure a loan of $60,000 from ACF. The money borrowed from Ms. Popert was to be returned on January 15, 2016, as Ms. Keane would be in receipt of $60,000 following a deposit into Ms. Keane's bank account.
7However, on January 15, 2016, Ms. Keane asked Ms. Popert for a further $6,000 in order to secure, from ACF, a loan of $100,000. ACF was no longer willing to extend a loan for $60,000 and in order to secure the larger loan, Ms. Keane had to provide a larger deposit. Ms. Keane borrowed a further $6,000 from Ms. Popert on January 15, 2016.
8On January 16, 2016, Ms. Keane borrowed a further $6,000 from Ms. Popert. The reason for the need for additional funds was that Ms. Keane was told that there had been a calculation error by ACF and therefore, additional funds for the deposit were required.
9On January 19, 2016, Ms. Keane borrowed another $8,000 from Ms. Popert. Ms. Keane was required to pay a larger deposit in order to secure the loan from ACF as Ms. Keane was a "high risk" borrower.
10On February 25, 2016, Ms. Keane borrowed a further $6,000 from Ms. Popert.
11As of February 25, 2016, Ms. Popert had loaned a total of $28,500 to Ms. Keane. In order to lend this money to Ms. Keane, Ms. Popert borrowed funds from her own credit lines. As of February 25, 2016, Ms. Keane had not repaid any of the money she had borrowed from Ms. Popert. In her claim in the Small Claim Court, Ms. Popert requested judgment only in the amount of $25,000.
12The fact that Ms. Keane borrowed $28,500 from Ms. Popert and did not pay any of that back is not in dispute. It is also not disputed that prior to starting her claim, Ms. Popert had made demands for the monies to be repaid.
13At the trial before the Deputy Judge, what was in dispute was whether Ms. Keane's obligation to repay $25,000 to her sister depended on whether Ms. Keane received the loan funds from ACF. The Deputy Judge found that it did not, and held that Ms. Keane had to pay Ms. Popert the amount of her claim, $25,000.
Findings of the Deputy Judge
14In granting Judgment in favour of Ms. Popert, the Deputy Judge made the following findings:
a) Ms. Keane was in no way a party to the fraudulent scheme.
b) Both Ms. Popert and Ms. Keane were out substantial sums of money because of the fraudsters and it was unlikely they would recover their money from the fraudsters.
c) There was no dispute that Ms. Popert had loaned her sister money and that Ms. Keane had not repaid the money she borrowed.
d) Ms. Popert was credible.
e) The money which Ms. Popert loaned to Ms. Keane was deposited into bank accounts as directed by the fraudsters and was not given directly to Ms. Keane. However, this did not make it any less of a loan between Ms. Popert and Ms. Keane.
f) There was no discussion between the sisters that the loan from Ms. Popert would only be payable if Ms. Keane received funds from ACF.
g) Ms. Keane owed her sister $25,000.
15The Deputy Judge also awarded court costs and costs to Ms. Popert in the amount of $500.
Issue
16The issue before me is whether the Deputy Judge erred in concluding that repayment of the money Ms. Popert loaned to Ms. Keane was not contingent on Ms. Keane receiving funds from ACF. If Deputy Judge made an error, was it an error of fact, an error of law, or an error of mixed fact and law?
THE LAW AND ANALYSIS
17An appeal from a final order of the Small Claims Court lies to a single judge of the Divisional Court where the amount is in excess of $2,500. The amount in this matter is $25,000, and therefore I have jurisdiction to hear this appeal: see ss. 19(1)(a), 19(1.2)(a) and 31 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
18On an appeal, the appellate court has the following powers, as set out in s. 134(1) of the Courts of Justice Act:
Unless otherwise provided, a court to which an appeal is taken may,
(a) make any order or decision that ought to or could have been made by the court or tribunal appealed from;
(b) order a new trial;
(c) make any other order or decision that is considered just.
Standard of review
19In order to resolve this issue, I must first determine the nature of the purported error and then, the applicable standard of review.
20If the purported error is a question of fact, then the standard of review is palpable and overriding error. If the purported error is a question of law, then the standard of review is correctness. If the purported error is a question of mixed fact and law, then the standard of review falls on a spectrum between correctness and a palpable and overriding error: see Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
21In order to come to her decision, the Deputy Judge was required to interpret the agreement or contract between the parties. It was not disputed that their agreement was not reduced to writing; it was an oral agreement. Nevertheless, it was still a contract. Contractual interpretation is a question of mixed fact and law: see Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 52. Therefore, the standard of review for the purported error falls on a spectrum between correctness and palpable and overriding error.
22The Deputy Judge had to determine if the parties had agreed that Ms. Keane's obligation to repay Ms. Popert was only triggered if Ms. Keane received the funds from ACF. The determination of the existence of such a term is a factual determination. In my view, the Deputy Judge correctly determined that there was no such term in the parties' agreement.
23In interpreting the oral contract and determining whether it included a term that repayment was contingent on Ms. Keane receiving loan funds from ACF, deference should be given to the Deputy Judge: see Canadian Northern Shield Insurance Company v. 2421593 Canada Inc., 2017 ONCA 570, at para. 14.
24The evidence of Ms. Keane was essentially that Ms. Popert knew that until Ms. Keane received the loan money from ACF, Ms. Keane would not be able to repay Ms. Popert. However, Ms. Keane acknowledged that she and Ms. Popert had not discussed this.
25In cross-examination, Ms. Keane gave the following evidence:
Q. So what do you say in general terms about your sister's claim against you that this was a promise to repay, that you made a promise to repay?
A. It was always, in my mind, it was always understood that it was completely contingent on the loan being advanced. I didn't have the money so how could I give her what I didn't have. So to me it was evident that I needed the loan to give her back the money.
Q. Was that made clear to her?
A. Honestly we never had a conversation about if this loan doesn't go through, this is what has to happen. We never had that conversation.
(See transcript of January 9, 2018, at p. 31, line 29 to p. 32, line 7).
26Conversely, Ms. Popert's evidence on cross-examination was that there was no agreement or discussion that this was a contingency loan:
Q. So just to sum up them Ms. Popert, the expectation, both your expectations was that payment of money would result in a loan being advanced, right? That was the expectation?
A. No, it was not.
Q. Maybe you can explain.
A. Your Honour, I don't know how to answer that one.
THE COURT: Well, he's just asked whether you expected that if he paid this money, she would get her loan?
A. She would get the loan, yes.
MR. STILMAN: Yes.
THE COURT: That I think was the question.
A. Okay, then I can handle that.
THE COURT: Am I correct, Mr. Stilman?
MR. STILMAN: That's the question yes. Maybe I was I little obscured there.
Q. By paying this money down, up front, a loan would be advanced to your sister, right?
A. Yes.
Q. And once the loan was advanced to your sister, she would repay you any funds that you had helped her with, right?
A. Whether she got the loan or not, she would pay me back.
Q. Okay, but you knew she was short of money, and that's why you were helping her with these payment advances, right?
A. Yes.
Q. Okay, so you knew the money wasn't going to come out of thin air, you knew that if she needed $2,000, she wasn't going to magically have $2,000 the next day, it was going to come from the loan funds, right? You knew that?
A. Pardon?
Q. You knew that?
A. Her and I entered into agreement that I would get my money back. It was never whether she – the loan came through or not.
Q. So …
A. Your' trying to say that – never mind. I stopped.
THE COURT: No, that's fine, ma'am.
MR. STILMAN: Q. So somehow magically by you giving her $2,000 on a day, or $3,000 on another day, or $8,000 on another day, some how magically even though she keeps going to you, and asking for more money in relation to a loan, somehow magically the next day you were supposed to get this money back from her, that's your understanding?
A. I'm not stupid
Q. I'm just wondering what your understanding was, Ms. Popert?
A. My understanding is, I lent my sister money and she was going to repay me. It was never, never an issue.
(See transcript of October 6, 2017, at p. 62, line 9 to p. 63, line 30).
27There was no acknowledgment that the loan from Ms. Popert to her sister was contingent on Ms. Keane receiving funds from ACF. It is not disputed that there was no discussion of Ms. Keane's loan from Ms. Popert being a contingency loan. There was no other independent evidence before the Deputy Judge which would support a finding that the loan between the sisters was a contingency loan: see Gill v. Khahk, 2004 BCSC 1079, at para. 41.
28Based on the evidence before the Deputy Judge, it was open to the Deputy Judge to find that this was not a contingency loan. I see no error made by the Deputy Judge in reaching this conclusion.
DISPOSITION
29After carefully reviewing the material filed and considering the submissions of counsel, and for the reasons outlined above, the appeal is dismissed.
30If the parties cannot agree on costs for the appeal, then they shall submit written submissions as follows:
The Respondent's costs submissions shall be served and filed on or before November 26, 2019, and shall not exceed two pages, double-spaced, and in 12-point font.
The Appellant's responding costs submissions shall be served and filed on or before December 18, 2019, and shall not exceed two pages, double-spaced, and in 12-point font.
The parties shall file their Bills of Costs with their written submissions. If there are any offers which the parties intend to rely on, then that offer(s) shall be filed with their written submissions.
The page limits above are exclusive of Bills of Costs, any offers to settle, and any authorities that the parties wish to rely on.
There shall be no reply costs submissions without leave of the Court.
Kumaranayake J.
Released: November 4, 2019
CITATION: Kean v. Popert, 2019 ONSC 6410
COURT FILE NO.: DC-18-033-00
DATE: 2019 11 04
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
ARLENE KEANE
Appellant (Defendant)
- and -
LINDA POPERT
Respondent (Plaintiff)
REASONS FOR JUDGMENT
[On appeal from a Decision of Deputy Judge S. Richardson of the Small Claims Court at Brampton, delivered April 16, 2018]
KUMARANAYAKE J.
Released: November 4, 2019