ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-10-415404
DATE: 20140121
BETWEEN:
RUTH KRAKOWSKI
Plaintiff
– and –
STEPHEN PETAROUDAS, PETER PETAROUDAS, ANNA PETAROUDAS AND ADNREWS PETAROUDAS
Defendants
Avrum D. Slodovnick, for the Plaintiff
No one appearing for the Defendants
HEARD: January, 13, 2014
JUDGMENT
C. BROWN J.
[1] The plaintiff, Ruth Krakowski, seeks judgment as against the defendants, Anna Petaroudas and Andrews Petaroudas, with interest thereon with respect to a loan which remains outstanding.
[2] Ms. Krakowski commenced this action on November 30, 2010. The defendants retained counsel and served a statement of defence in February of 2011, to which the plaintiff replied on March 8, 2011. Subsequently, the defendants' counsel withdrew from the record. The defendants did not retain new counsel nor did they further pursue their defence of this action.
[3] From April of 2011, Ms. Krakowski, through her counsel, Mr. Slodovnick requested the defendants' documents, and received assurances from the defendants' then-counsel that affidavits of documents would be served. No affidavits of documents were received, other than an affidavit of documents served by Andrews Petaroudas, which listed no documents in Schedules A, B or C, and no individuals in Schedule D. No affidavits were received on behalf of any of the other defendants.
[4] On December 15, 2011, Master Short ordered that the defendants deliver their sworn affidavits of documents and copies of Schedule A productions within 30 days. The defendants failed to comply with this Order and Andrews Petaroudas failed to provide a further and better affidavit of documents, or to serve his Schedule A documents.
[5] On the basis of this, on October 12, 2012, Master Dash ordered that the statement of defence of all four defendants be struck and that costs be paid in the amount of $650.
[6] On October 19, 2012, the Registrar granted default judgment as against Stephen and Peter Petaroudas in the amount of $25,173.69, with costs of $1,250. At that time, the plaintiff did not proceed as against Anna and Andrews Petaroudas, as they had not been signatories to the promissory note witnessing the loan.
[7] Given that this Court ordered the statement of defence to be struck, the allegations in the statement of claim are deemed to be admitted by the defendants pursuant to the Rules of Civil Procedure. The paragraphs of the statement of claim that relate to Anna and Andrews Petaroudas are paragraphs 4-7, and 10-14.
[8] At the trial, Ms. Krakowski gave evidence consistent with and supportive of the allegations made in the statement of claim as against the defendants, Anna and Andrews Petaroudas.
The Evidence
[9] Ms. Krakowski testified that she lives at 76 Reiner Road, Toronto, two houses from the defendants, Anna and Peter Petaroudas, who reside at 72 Reiner Road. She testified that the defendants were longtime neighbors, and held themselves out to be decent, religious people. She grew to trust them as a result.
[10] In June of 2010, Anna approached her indicating that the Petaroudas' older son, Stephen needed money for a short term loan for his business, and asked if she would lend Stephen the sum of $30,000. The plaintiff was reluctant to do so, as the monies would come from her life savings and she does not have a profession or any family support or backup. She testified that that amount of money was substantial for her.
[11] In order to persuade her to lend the money, Anna said she would stand behind the loan, offered to personally repay the monies within three months with interest at the rate of 20% and, upon inquiry, told the plaintiff that she and her husband, Peter, owned their home. Ms. Krakowski stated that it was important to her that they owned the home, that she relied on Anna's statement in deciding to lend the Petaroudas the money, and that otherwise she would not have lent them the money.
[12] In reliance on the statements made by Anna that she would stand behind the loan and that she and her husband owned their home, Ms. Krakowski advanced a loan of $30,000 and a promissory note dated June 16, 2010 was executed by the defendants, Stephen, and Anna's husband, Peter Petaroudas. The promissory note, introduced in evidence as Exhibit 1, indicates that Anna was to have executed the promissory note, but it was changed in handwriting to cross out Anna's name and replace it with Peter's name. The promissory note stipulated the due date to be September 16, 2010, that the amount of the loan was $30,000, "with interest on the loan to be at the rate of 20% per annum, calculated monthly, both before and after maturity, default or judgment, with interest on overdue interest at the same rate", and stipulated that, as at the due date of September 16, 2010, the amount owing was $31,500.
[13] On the due date, the defendants did not repay the loan. The plaintiff requested of Anna and Peter Petaroudas repayment of the loan. She testified that, when asked for the money, they laughed and said that they did not own the property. She subsequently discovered that it was owned by Andrews, who has now moved out of the home. She further discovered, through her lawyer, that all previous homes, prior to 72 Reiner Road, were owned by Anna and Peter Petaroudas. The Transfers/Deeds of Land for their previous homes, in evidence before me, did indeed indicate that they were registered on title as the owners of the properties, while the Transfer/Deed of Land for 72 Reiner Road named their son, Andrews, as the owner. It is of note that the Land Transfer Tax Act form appended to the Transfer/Deed of Land was signed by Andrews' mother, Anna, and not himself.
[14] The plaintiff subsequently went to the Petaroudas' door, which was answered by Andrews, and, when she requested payment on the loan, he answered that "we will pay you back, don't worry, be patient". No payments were made thereafter, until September of 2011, when the amount of $14,000 was paid. On April 9, 2012, another payment of $2,000 was made. These amounts were taken into account pursuant to the Judgment granted on October 19, 2012 as against Stephen and Peter Petaroudas. Since the date of the Judgment, additional amounts were made on November 5, 2012 in the amount of $500, on February 6, 2013 in the amount of $500 and on June 19, 2013 in the amount of $1,000, totaling $2,000. No other payments have been received.
Analysis
[15] It is the position of the plaintiff that, although only two defendants signed the promissory note, it was represented to Ms. Krakowski that Anna and Peter Petaroudas owned their home, which was a misrepresentation, and which misrepresentation induced her to lend the defendants the $30,000. Based on what she was told, she was confident that the defendants’ promises of repayment would be made and would be enforceable as against the parents, Anna and Peter. Only later, after the due date of the loan had passed, did the plaintiff learn that the home was not in the name of Anna and Peter, but rather was in the name of their son, Andrews, who was 21 years old at the time the home was purchased on July 22, 1999 and who, at that time, was a student. It is the plaintiff's submission that it is very unlikely, given the son's age and status at the time of the purchase, that he would have purchased or contributed to the purchase of the home. It is the submission of the plaintiff that, given all of the evidence, it appears that the defendants, Anna and Peter, registered the home in the name of their 21-year-old son in order to shield themselves from creditors.
[16] Counsel for the plaintiff submits that such a registration in the name of their youngest son, is unusual and atypical, and that this Court is entitled to draw the inference that the defendants intended to shield their main asset by putting their home in their youngest son's name, rather than into their names, as they had done with previous homes. Based on the evidence adduced, I agree with the plaintiff's counsel.
[17] Plaintiff's counsel submits that, whether Andrews knew, at the time of the purchase of the home that he was on title, he certainly does now and has done nothing to transfer the home out of his name and into that of his parents. Further, counsel for the plaintiff notes that if Andrews had genuinely been exempt from liability, or if he had had a good defence, it would have been expected that he would defend the action as against himself, but did not and, indeed, did nothing when the statement of defence was struck. I note that, based on the evidence, Andrews, when requested by Ms. Krakowski to repay the loan, appeared to acknowledge the loan and to state that they would pay the money back and that she should not worry but should be patient.
[18] Based on the evidence, the plaintiff's testimony and the submissions of her counsel, Mr. Slodovnick, I grant judgment in favour of the plaintiff, as against the defendants, Anna Petaroudas and Andrews Petaroudas, in the amount of $29,908.01, with post-judgment interest thereon, pursuant to the terms of the promissory note, at 20% per annum calculated monthly. This amount is based on the amount ordered to be paid by the Registrar on October 19, 2012, with accrued interest thereafter and with credit given to the defendant's for the three payments made as set forth at paragraphs 7 and 15, above. I further order costs payable by the defendants, Anna Petaroudas and Andrews Petaroudas on a substantial indemnity basis, in the amount of $5,379.54.
Carole J. Brown J.
Released: January 21, 2014
COURT FILE NO.: CV-10-415404
DATE: 20140121
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RUTH KRAKOWSKI
Plaintiff
– and –
STEPHEN PETAROUDAS, PETER PETAROUDAS, ANNA PETAROUDAS AND ADNREWS PETAROUDAS
Defendants
REASONS FOR JUDGMENT
Carole J. Brown J.
Released: January 21, 2014