COURT OF APPEAL FOR ONTARIO

CITATION: Friendly v. Elkind, 2014 ONCA 406

DATE: 20140520

DOCKET: C58057

Gillese, van Rensburg and Hourigan JJ.A.

BETWEEN

Lynda Friendly and

Lynda Friendly & Associates

Applicants (Respondents)

and

Manuel Elkind and

1671379 Ontario Inc.

Respondents (Appellant)

Gary S. Joseph and Kristy Maurina, for the appellant

Elliott S. Birnboim and Gargi Chopra, for the respondent

Heard: May 6, 2014

On appeal from the order of Justice Nancy L. Backhouse of the Superior Court of Justice, dated November 22, 2013 and on leave to appeal the cost order of Justice Nancy L. Backhouse of the Superior Court of Justice, dated January 9, 2014.

ENDORSEMENT

[1] This is an appeal from the order of Backhouse J. dated November 22, 2013, granting summary judgment requiring the appellant to repay the sum of $195,538.98 to the parties’ joint line of credit, and payment of $10,000 plus interest to the corporate respondent. The appellant also seeks leave to appeal a costs award in the sum of $40,000.

[2] The appellant Manuel Elkind and the personal respondent Lynda Friendly are engaged in matrimonial proceedings. Ms. Friendly owns the matrimonial home at 56A Oriole Road, Toronto, against which is registered a joint line of credit. Pursuant to a marriage contract, Mr. Elkind has the right to be paid his proven contribution to the matrimonial home plus one half of any balance after Ms. Friendly’s initial contribution and the balance due on the line of credit, and Ms. Friendly has the right to require a buyout of her 40% interest in 1671379 Ontario Inc. (“167”), which is owned 40% by each of the parties and 20% by the appellant’s children. The major asset of 167 is a development property located on Welland Avenue, St. Catharines.

[3] Between 2008 and 2012 the appellant withdrew funds from the joint line of credit for his personal and business uses, at times without Ms. Friendly’s knowledge or consent. He signed a number of documents promising to repay the amounts, and it is in respect of these debts, as well as a promissory note in favour of the corporate respondent, that summary judgment was sought by the respondents and granted by the motion judge.

[4] The appellant does not contest the source and amount of the funds he received (except with respect to the sum of $10,000 stated to be repayable to the corporate respondent). He concedes that he intended to repay to the joint line of credit, what he had borrowed, in the amounts reflected in the documents. At issue is whether the repayment obligations have matured, whether there is any defence to any of the promises to pay, and whether summary judgment should have been refused on the basis that there are other financial issues outstanding between the parties in their matrimonial proceedings.

[5] For the reasons that follow, the appeal is dismissed.

[6] First, we agree with the conclusion of the motion judge that each of the repayment obligations has matured.

[7] By written agreement dated July 27, 2012, Mr. Elkind agreed to repay the sum of $65,000 on the earliest of certain specified events, including written demand. The commencement of these proceedings constituted a written demand, such that payment is due. A promissory note dated August 5, 2009 required payment of $10,000 plus interest to the corporate respondent by April 1, 2010; repayment was extended by the parties to April 1, 2013 by a handwritten, signed and witnessed addendum. Both of these payment obligations have matured.

[8] A document entitled “Loans Made to Manny Elkind and 1671379 Ontario Inc. from 56A Oriole Road (Lynda Friendly)” and dated July 26, 2010 references three loans between June 2008 and July 2010 for a total of $52,208.98, as well as the August 2009 note in favour of the corporate respondent, for $10,000. The document states: “All of these funds are to be paid back to Lynda Friendly from funds that come from the sale of 583 Welland Avenue, St. Catharines in first position, whether paid by Manny Elkind or 1671379 Ontario Inc.”

[9] In December 2012, 167 entered into an agreement for the sale of 583 Welland Avenue, St. Catharines and received an initial deposit of $500,000, of which $250,000 was to be paid to 167, to be used for its own purposes. The appellant contends that, because the sale of 583 Welland Avenue, St. Catharines was conditional upon the completion and delivery of fully serviced lots, which had not yet occurred, there is no obligation to repay the amounts referenced in the July 2010 document.

[10] The motion judge’s conclusion that the repayment obligation had matured was based on the uncontradicted evidence that the sale, although conditional, had generated funds in the form of the deposit. We agree with the motion judge’s conclusion that the document provided for “an unconditional promise to pay at a determinable time”. As soon as funds were received from the sale, the payment obligation was triggered; this intention was apparent from the provision that the respondent was to be “in first position”.

[11] The fact that there was a subsequent court order directing the payment of the funds to various purposes did not affect the maturity of the payment obligation. The motion judge was satisfied that the appellant had access to some of the proceeds, and she noted that he had used the deposit on the sale of the property in part to repay his own shareholder loans. We see no error in her conclusion with respect to the July 2010 loan document.

[12] Between September 2010 and March 2011, Mr. Elkind made withdrawals totalling $78,330 from the joint account and signed four documents in which he agreed to repay the monies referred to in the notes along with other funds he had withdrawn from the joint line of credit “when the funds [were] available from [him] or [his] estate, upon [his] death.” The motion judge rejected the appellant’s contention that it was up to him to decide whether he had funds available or whether to postpone the payment until after his death. She concluded that funds had become available to the appellant, and that the loans were therefore payable.

[13] The appellant argues that there were in fact no funds “available” in part as a result of the various orders obtained by Ms. Friendly in the litigation, which have restricted the ability of 167 to make payments, except in the ordinary course of business. He contends that at least there was contradictory evidence on the issue and that summary judgment ought not to have been granted.

[14] There was clearly evidence of funds being available to the appellant when 167 received the deposit on the conditional sale of the St. Catharines property, and as a result of the management fee he negotiated when he increased 167’s mortgage. In an endorsement of August 20, 2013, among other things, enjoining 167’s ability to make further payments, mortgage draws or commitments without further order of the court or Ms. Friendly’s consent, Paisley J. concluded that the appellant had received repayment of shareholder loans, payment of personal legal fees and mortgage commitment fees, all in breach of an earlier order that any payments be approved by Ms. Friendly. This was a prior finding of the court with respect to funds that had been “available” to the appellant. Accordingly, the payment obligations of the appellant under the four documents he signed between September 2010 and March 2011 had matured.

[15] The motion judge also rejected, on the evidence, the appellant’s contention that he was vulnerable and had been taken advantage of by Ms. Friendly. This was a bald allegation unsupported by any evidence. The appellant had legal counsel or access to counsel throughout. In any event he had been refused leave to amend his answer to plead unconscionability.

[16] The appellant argues on appeal that he has a claim for set-off with respect to the amounts secured by the promissory notes, and that any liability on the promissory notes is inextricably bound up with his claims in the matrimonial proceedings. There is no right to set-off as a matter of law or fact. At best, the appellant has a claim in the matrimonial proceedings that he has yet to establish, that he made a contribution toward the matrimonial home for which he should receive credit under the parties’ marriage contract. This claim, like Ms. Friendly’s claim for payment of her share of the value of 1671379 Ontario Inc., remains outstanding, and is not affected by the requirement that the appellant repay his obligations to the joint line of credit.

[17] The appellant conceded his obligation to repay funds that were taken from the parties’ joint line of credit. He signed promissory notes and other documents confirming his intention to repay the amounts. The terms of repayment were clear from the documents, and the appellant established no triable issue in defence to his repayment obligations. Accordingly, summary judgment was properly granted and the appeal to this court is dismissed.

[18] As the appellant acknowledges, his motion for leave to appeal costs depends on his success in the appeal. As the appeal has been dismissed, leave to appeal costs is denied.

[19] Accordingly, the appeal is dismissed, with costs to the respondents fixed in the amount of $10,000 inclusive of disbursements and HST.

“E.E. Gillese J.A.”

“K. van Rensburg J.A.”

“C.W. Hourigan J.A.”