Ranger v. Penterman, 2011 ONCA 412

CITATION: Ranger v. Penterman, 2011 ONCA 412

DATE: 20110531

DOCKET: C49077

COURT OF APPEAL FOR ONTARIO

Weiler, Rouleau and Karakatsanis JJ.A.

BETWEEN

Claude Ranger and Claudette Ranger

Plaintiffs (Appellants on Appeal)

and

Louis Penterman and Patricia Penterman (also known as Patricia Leigh McGowan)

Defendants (Respondents on Appeal)

Justin Bertrand, for the appellants

Guy Régimbald, for the respondents

Heard: May 2, 2011

On appeal from the judgment of Justice Michel Charbonneau of the Superior Court of Justice dated June 4, 2008.

By the Court:

[1] The appellants appeal the trial judge’s decision dated June 4, 2008, dismissing their claim for breach of contract or, in the alternative, for unjust enrichment in the amount of $89,500 plus costs and interest.

[2] The appellants, Claude and Claudette Ranger, advanced monies to the respondents[^1], Louis and Patricia Penterman, both directly and indirectly, through their son Pierre Ranger, the respondents’ lawyer. The respondents admitted receipt of the money, but denied it was a loan. They claimed they had no contact or relationship with the appellants and were not aware that the funds were coming from the appellants.

[3] In dismissing the claim, the trial judge found that there were no dealings and no loan agreement between the parties. He found that while the respondents received the benefit of the funds, their only responsibility was to account to Pierre Ranger.

[4] The appellants submit that the trial judge erred: in refusing to admit documents that were relevant to the advancement of monies to the respondents; in failing to consider whether the cheques payable directly to the respondents and marked “loan” evidenced a loan contract; and in failing to consider whether the appellants were entitled to their claim based upon unjust enrichment.

[5] For the reasons that follow, we would allow the appeal.

Background

[6] The appellants provided their son, Pierre Ranger, with cheques dated between November 2001 and December 2003, believing the funds to be loans to the respondents. Pierre Ranger is a lawyer and was acting for the respondents in litigation in Quebec at the time. He testified that the respondents had requested a loan to assist with trial and personal expenses pending the conclusion of their Quebec litigation and that he contacted his parents to provide the funds, as they had loaned the respondents money in the past. The respondents claimed their agreement was with their lawyer, for an investment in a company that has since gone bankrupt.

[7] There were three series of cheques. The trial judge found that the cheques comprising the first and third series, totalling all but $11,000 claimed, were forwarded by the appellants to their son Pierre Ranger, intending them to be a loan to the respondents; and that the respondents had received the funds or the benefit of those funds. However, the trial judge accepted the respondents’ position that their agreement was with Pierre Ranger and not with the appellants.

[8] The trial judge did not address the issue of unjust enrichment and declined to make a finding with respect to the respondents’ testimony that the money was advanced to them by Pierre Ranger as an investment in a company that had since gone bankrupt.

[9] In addition to rejecting the evidence of Pierre Ranger, concerning the respondents’ knowledge that the money being advanced was a loan to them from his parents, the trial judge refused to admit documents sent by the respondents to Pierre Ranger disclosing the nature of the requests for the funds and an acknowledgment of the debt, on the basis that they were protected by solicitor-client privilege.

[10] We will first address the issue of whether the trial judge erred in excluding this evidence and then deal with the substantive issues.

Exclusion of evidence

[11] The appellants sought to admit into evidence a series of documents in which any reference to the Quebec litigation had been redacted by Pierre Ranger. They also placed before the court an unredacted version so that the trial judge could have the benefit of assuring himself this is what had been done.

[12] We agree with the appellants that the trial judge erred in refusing to admit the redacted version of the documents that make clear that the respondents were requesting the funds to pay for their personal needs and not as an investment in their company. They confirm the nature of their requests for money and the purposes of the loans. As well, in May 2004, the respondents advised Pierre Ranger that they acknowledged a debt to the appellants – “Your Dad will be repaid”.

[13] The trial judge excluded the evidence on the basis that they were subject to solicitor-client privilege. While it is not clear that the trial judge reviewed the unredacted documents, we were provided with the sealed unredacted documents and have reviewed them.

[14] The fact that the documents were contemporaneous with a solicitor-client relationship does not necessarily make the communications in the documents privileged. Although there are several references to the ongoing litigation and privileged communications in the documents, the specific communications in issue were not related to the solicitor-client relationship. The respondents were requesting funds to pay for various ongoing living expenses pending the final resolution of the lawsuit. The documents include specific requests for funds to support living expenses such as groceries, gas, utilities, truck payments, property taxes for their home and farm lands, home insurance, and other living expenses.

[15] In our view, the trial judge erred in excluding the redacted documents. The requests for funds did not fall within the usual and ordinary scope of the professional relationship or within the continuum of communications in which the solicitor tendered advice.

[16] Furthermore, the respondents had already selectively introduced some of the documents. Obviously they are entitled to waive privilege but they cannot do so on a selective basis that results in an incomplete and misleading picture being presented to the court. Having put into issue the nature and purpose of the advancement of funds, it would be unfair to permit them to introduce some of the communications, but exclude other documents relating to the same issue. The redacted versions do not in any way disclose communications related to the Quebec lawsuit or solicitor-client advice and we hold they are admissible.

[17] The statements in the documents are inconsistent with the respondents’ testimony and position that the advances were an investment in their new company. (It is worth noting that the respondents were unrepresented at trial.)

[18] Statements in the documents make clear that the bulk of the monies advanced related to specific requests for personal living expenses. They support the appellants’ position that the monies were advanced as personal loans. They do not support the respondents’ evidence that the monies represented an investment by their lawyer in a new company.

[19] The admission of the documents would very likely have resulted in very different credibility findings. As a result, the decision of the trial judge must be set aside.

[20] In our view, however, a new trial is not required, except as it relates to the claim for $11,000. The appropriate outcome is otherwise clear on the respondents’ admissions and the documentary record before us.

The first series of cheques

[21] The first series of five cheques, dated between November 2001 and January 2002, were made payable to Pierre Ranger, or Pierre Ranger “in trust”, with the notation “Penterman”. They totalled $21,500 and were deposited to Pierre Ranger’s trust account. The respondents’ Quebec counsel in the litigation was in turn paid $20,000 from the trust account. A further $3000 was paid out to Pierre Ranger for disbursements.

[22] The money was paid to the respondents’ Quebec lawyer for professional services rendered to them during their Quebec trial and for disbursements for the direct benefit of the respondents. The respondents were ultimately successful in the Quebec litigation. They would clearly have understood that the funds were paid on their behalf and the source of those funds expected to be repaid.

[23] Pierre Ranger had previously arranged to have his father lend money to the respondents in 1992. In a 1994 letter to the respondents, Pierre Ranger advised that his father had loaned the respondents the funds and requested that the repayment cheques be made payable to his father. In 1999, the respondents repaid the loan with a bank draft payable to C. Ranger. The appellants thus had a previous lending relationship with the respondents and this evidence, coupled with the evidence of the respondents’ requests for money for living expenses pending the outcome of the Quebec litigation, as well as the evidence concerning the third series of cheques clearly evidencing subsequent loans discussed below, leads us to conclude that the respondents’ financial relationship in regard to this first series of cheques was with the appellants.

[24] Furthermore, there is no question that the respondents subsequently became aware that the appellants were the lenders. One of the documents excluded by the trial judge is an admission by the respondents that they would repay the appellants.

[25] The appellants are therefore entitled to judgment for the amount of $21,500.

The second payment

[26] The $11,000 claim for the second category of funds relates to a cheque dated August 9, 2002 from a third party, Pierre Seguin, made payable to the respondents. The trial judge did not accept the evidence of Pierre Ranger that this was money owed to the appellants that was made payable to the respondents to make things easier and quicker. He believed the respondents that they had been told that the deposit of $10,672 represented interest on the GIC that was being held as security in the legal proceedings.

[27] It is not clear to us based upon the record available to us, whether this amount, funded by a third party, was in fact monies advanced by the appellants. Nor do we accept the factual characterization of the trial judge as it was based on his adverse findings of credibility, which we have determined must be set aside. This issue must be retried.

[28] The claim for $11,000 cannot be determined on this record and should be remitted for the trial of an issue.

The third series of cheques

[29] These 17 cheques were paid between October 2002 and December 2003, in amounts ranging from $1000 to $5000, and totalled $57,000.

[30] The final group of cheques were drawn on the appellants’ account, were payable directly to the respondents, were clearly marked ‘loan’, and were deposited to the respondents’ personal account. The trial judge failed to note these important facts.

[31] The respondents admitted in their Statement of Defence that they were aware as early as December 2002 that funds were being sent to them by one of the appellants. In fact, numerous copies of cheques were contemporaneously faxed to the respondents. Furthermore, in many instances, the amounts advanced relate to the various requests for money for specific living expenses as set out in the excluded documents and the responding cheques.

[32] While the respondents also testified that the advances were based upon an agreement with Pierre Ranger that he would invest in their new company, this is inconsistent with the documentary evidence.

[33] In our view, this record clearly establishes a loan contract between the parties for the amount of those cheques totalling $57,000.

Interest

[34] There is insufficient evidence supporting the appellants claim for 8% interest. In the absence of any documentary evidence regarding interest, the appellants shall have 5% interest per year pursuant to s. 3 of the Interest Act, R.S.C., 1985, c. I-15.

Conclusion

[35] Accordingly, the appeal is allowed. The appellants shall have judgment in the amount of $78,500 plus costs and interest at 5% per year. The issue regarding the third party cheque for $11,000 is remitted back for the trial of an issue.

[36] The appellants are entitled to their costs of the appeal and at trial. We do not have submissions with respect to costs. Subject to receiving further submissions from the parties within 10 days of the release of these reasons, we would fix the costs of the appeal at $15,000 and the trial costs at $20,000 both payable to the appellants.

RELEASED: May 31, 2011 “KMW”

“K.M. Weiler J.A.”

“Paul Rouleau J.A.”

“Karakatsanis J.A.”

[^1]: Reference to the appellants is a reference to either one of or both of the appellants, Claude and Claudette Ranger. Similarly, reference to the respondents is a reference to either one of or both of the respondents, Louis and Patricia Penterman.