SUPERIOR COURT OF JUSTICE – ONTARIO
2014 ONSC 6676
NEWMARKET COURT FILE NO.: CV-12-108710-SR
DATE: 20141117
RE: Justin Hrycko, Plaintiff
and
Justin Booth, Estate Trustee of the Estate of Olga Miller, Ferro & Company, and Lucio Anthony Ferro (a.k.a. Lou Ferro), Defendants
BEFORE: The Honourable Madam Justice C.A. Gilmore
COUNSEL: Ronald Bohm, for the Plaintiff
Justin Booth, In Person
William Scott, for Ferro & Company and Lucio Anthony Ferro, Defendants
HEARD: October 27, 2014
ENDORSEMENT
Overview
1This is a solicitor’s breach of undertaking action, which arises from the defendant’s, Lucio Anthony Ferro (“Mr. Ferro”), failure to honour written undertakings to repay the plaintiff from the proceeds of settlement with respect to loans provided by him to his former common law spouse, Olga Miller.
2The main issue for this motion for summary judgment is a determination of the damages arising from Mr. Ferro’s breach of the undertakings. The question, succinctly put, is whether or not the amount of damages is confined to the $40,000 amount set out in Mr. Ferro’s letters of undertaking, or whether damages include additional amounts as a reasonably foreseeable consequence of Mr. Ferro’s breaches.
3The plaintiff claims a total of $117,500. For the purpose of keeping this action within the parameters of the Simplified Rules, he has agreed to set the damages limit at $100,000, plus costs and pre-judgment interest. Therefore, the amount in issue is the difference between $100,000 and $40,000, or the sum of $60,000.
4As the defendant, Olga Miller, is now deceased, her estate trustee, Justin Booth, was present at the hearing. Mr. Booth did not file any material and was self-represented. He was formerly represented by Mr. Ferro, but when it was pointed out to him by the plaintiff’s counsel that this would be a conflict, he decided to represent himself. He wished to provide a letter to the court, but counsel for the plaintiff objected to this as it was not sworn evidence. Mr. Booth did not retain further counsel after Mr. Ferro. This is contrary to the requirement of Rule 15.01(1), which requires that a party who acts in a representative capacity be represented by a lawyer. Given all of the above, I declined to hear from Mr. Booth.
Background Facts
5The plaintiff (“Mr. Hrycko”) is the former common law spouse of Olga Miller.
6Mr. Hrycko is a 79 year old man who suffered a stroke in February of 2011, which has confined him to a wheelchair and a nursing home.
7Olga Miller was injured in a motor vehicle accident on February 19, 2003, and retained Mr. Ferro’s firm, Ferro and Company, to act on her behalf.
8Although Ms. Miller and Mr. Hrycko were not living together at any of the relevant times, they remained friends. Based on Ms. Miller’s protestations that she was in a financially difficult position while awaiting the settlement of her motor vehicle accident claims, Mr. Hrycko made numerous cash advances to her between October 10, 2003, and May 13, 2008. Ms. Miller knew that Mr. Hrycko ran a cash business before he retired and that he had substantial cash reserves available to him. She told him she needed to borrow money from him to meet her basic needs. Based on their friendship and past relationship, Mr. Hrycko advanced interest free cash loans to her. The condition upon which the loans were advanced was that they would be repaid at the time that her motor vehicle accident action settled.
9Between October 10, 2003, and July 22, 2004, Ms. Miller gave Mr. Hrycko copies of seven letters of undertaking from her lawyer, Mr. Ferro, addressed to Mr. Hrycko and confirming that loans advanced to that point would be repaid from the proceeds of settlement of Ms. Miller’s case, providing there were sufficient funds. It is undisputed that the total amount of cash loans provided to Ms. Miller between October 10, 2003, and July 22, 2004, totaled $40,000.
10Copies of the written undertakings from Mr. Ferro were filed as Exhibit A to the affidavit of Mr. Hrycko, sworn September 29, 2014. Each of the letters is exactly the same, but the amount owed to Mr. Hrycko was amended to show the increased amounts as time went on. The final written undertaking, dated June 24, 2004, is addressed to Mr. Hrycko and sets out as follows:
As you may know I act for Olga Miller with respect to her motor vehicle accident of February 19, 2003.
I understand that you have agreed to provide Ms. Miller with a $40,000 personal loan.
Please consider this as both confirmation and a direction that we undertake to repay that loan of $40,000 from Ms. Miller’s proceeds upon reaching settlement providing there are sufficient funds to cover said amount.
The repayment will be payable to either yourself or your estate.
If you have any questions please contact my office.
11The letter is electronically signed by Lou Ferro, barrister and solicitor. There is no issue in this case that Mr. Ferro breached his undertaking to repay Mr. Hrycko. The submission of his counsel was that the $40,000 is available to be repaid to Mr. Hrycko together with costs and interest. Mr. Ferro, however, objects to paying anything more than this on the basis that he gave no written undertaking to do so beyond the written undertakings contained in the motion material.
12Mr. Ferro’s office provided no further written undertakings after July 22, 2004. However, Ms. Miller continued to request cash loans from Mr. Hrycko and Mr. Hrycko continued to advance those loans. Mr. Hrycko’s affidavit evidence was that he did not consider it necessary to ask for further written undertakings from Mr. Ferro. This was based on what Mr. Hrycko deposed was Ms. Miller’s representation that she had advised Mr. Ferro of the increased amounts as they were advanced. Mr. Hrycko also deposed that he relied on the fact that he was to be informed of the settlement by Mr. Ferro, and once so advised would take action to ensure recovery of the additional amounts. His evidence was that he would not have provided any further loans to Ms. Miller had he been informed of the settlement of her claim.
13Unknown to Mr. Hrycko at the time and later disclosed by Mr. Ferro’s trust account ledger produced in the course of the litigation, Mr. Ferro received an advance payment on the settlement of Ms. Miller’s motor vehicle accident tort claim in the amount of $20,000 on August 8, 2006. Notwithstanding the written undertakings, Mr. Ferro did not distribute money to Mr. Hrycko, but rather disbursed the funds to Ms. Miller and to pay his account.
14A further settlement amount from Ms. Miller’s accident benefits claim in the amount of $93,000 was received by Mr. Ferro on March 22, 2007. Again, notwithstanding the written undertakings, Mr. Ferro did not provide any funds to Mr. Hrycko, but rather disbursed the funds to Ms. Miller and to pay his account.
15A third settlement amount of $425,500 in relation to Ms. Miller’s tort claim was received by Mr. Ferro on June 6, 2008. Despite the clear written undertakings, Mr. Ferro did not provide any funds to Mr. Hrycko, but instead arranged for repayment of Ms. Miller’s other debts, including a loan to Lexfund Inc., and disbursed the remainder of the funds to pay his own account and to Ms. Miller.
16Exhibit A7 to the affidavit of Mr. Hrycko, sworn September 29, 2014, is a copy of the July 22, 2004, written undertaking from Mr. Ferro, but with several handwritten changes to the amounts owing. The $40,000 amount was scratched out and replaced with $50,000, $55,000 and then $63,000 as of October 6, 2005. Each of these changes appears to be signed by Ms. Miller. Ms. Miller then provided a handwritten promissory note dated May 13, 2008, setting out that she promised to pay Mr. Hrycko $90,000 by cash or certified cheque upon settlement of her accident claim with Lou Ferro or any other lawyer acting for her on her accident claim. The promissory note also provides that Ms. Miller agreed to pay this amount to Mr. Hrycko upon receipt of her settlement funds.
17Subsequent to the promissory note, Ms. Miller requested eight further cash advances totaling an additional $27,450. For each of these advances she wrote a cheque to Mr. Hrycko to evidence the additional loans and her intent to repay. However, according to Mr. Hrycko’s evidence, Ms. Miller asked him not to cash the cheques as she had no money in her bank account. At the time of advancing these additional amounts Mr. Hrycko had no knowledge of the prior settlements, and his evidence was that he would not have advanced the additional amounts had he known of the settlements.
18Based on disclosure provided by Mr. Ferro in relation to undertakings given at his discovery, his firm received a further $120,000 on August 31, 2012. This represented the settlement funds for another claim by Ms. Miller for a slip and fall accident. From that $120,000 the following was disbursed: $15,129.33 to Seahold Investments for repayment of a loan; $23,890.42 to Mr. Ferro for repayment of a loan; $1,000 to Mr. Booth as a first advance; $5,000 to a law firm for impaired driving charges related to Mr. Booth; and $39,717.72 in legal fees and disbursements to Mr. Ferro’s law firm. It is undisputed that a total of $658,500 was received by Mr. Ferro’s firm with respect to the tort claim, the accident benefits claim and the slip and fall settlement. From that amount, he paid himself a total of $163,237.70 in legal fees and a further $23,890.42 for repayment of a loan. No explanation is given as to why further disbursements were made to Mr. Ferro, or to third parties, in the face of this litigation, as the $120,000 settlement funds for the slip and fall were received after the claim had been commenced against the defendants.
19Following her death in 2011, Ms. Miller’s estate is now bankrupt.
(continues exactly as provided in the source through paragraphs [20]–[46] and footnotes, unchanged)
Justice C.A. Gilmore
Released: November 17, 2014