CITATION: Bolsover v. Rahey, 2015 ONSC 3328

COURT FILE NO.: CV-13-482553

DATE: 20150528

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROBERT BOLSOVER

Plaintiff

– and –

CARL RAHEY

Defendant

Neil Abbott, for the Plaintiff

Self-represented

HEARD: May 19 and 22, 2015

REASONS FOR JUDGMENT

JUSTICE MATHESON

1In this action, the plaintiff seeks judgment regarding amounts owing under two promissory notes, in the total amount of $100,000, plus interest. The defendant agrees that he received the money, but characterizes it as an investment by the plaintiff for which payment is not yet due.

Brief background

2The plaintiff is currently 80 years of age and retired. He was formerly in the car leasing/rental and sales business. In the ten years prior to his retirement, he was a car salesman. The plaintiff met the defendant in about 2004 when the defendant came in to buy a car. Ultimately, the defendant purchased a 2002 Thunderbird for his wife. Later on, when the plaintiff changed his job and began to work at a Jaguar dealership, the defendant came and bought another car. Along the way, they became friends. The defendant is in the same age group as the plaintiff.

3In the course of discussing financing for the first car purchase, the defendant told the plaintiff that he was having problems with the tax department (“CRA”) and was taking it to court. The plaintiff testified that the defendant asked him for money to assist with his court case and he agreed to lend him money for that purpose. The defendant testified differently. He said that, unexpectedly, the plaintiff showed up at his home and offered to give him money to assist him. There is no dispute, however, that the plaintiff gave the defendant $60,000 by bank draft dated December 15, 2004, and another $40,000 by certified cheque dated November 14, 2005. The plaintiff borrowed these funds from his own bank, using his home as security.

4The defendant agrees that he received these monies and is obliged to repay the plaintiff, but testified that it was an investment, not a loan, and repayment is not due until his dispute with CRA ends successfully.

Promissory Notes

5There is no dispute that the defendant’s accountant suggested to him at the time that there should be promissory notes in relation to the advance of these funds. I conclude that the following three notes were prepared by the defendant’s accountant, given to the defendant, signed by him and given to the plaintiff.

6The first note is entitled “Promissory Note re: Advance” dated November 15, 2004. It is in the amount of $60,000 in consideration for the advance of $60,000. It provides a “promise to repay” that amount “on a date 24 months from the date of this note, without interest.” The note further states that it is callable “by 24 months after the date of this note, without interest.”

7The second note is entitled “Promissory Note re: Success” and is also dated November 15, 2004. It is in consideration of the advance of the same $60,000. The second note refers to “Success” and provides for the payment of $250,000. The plaintiff testified that this note entitles him to another $250,000 if the defendant is successful in his action against the CRA. This note is not the subject of a claim in this action.

8The plaintiff testified that a further note, in the same form as the above “Promissory Note re: Advance”, was signed by the defendant and provided to the plaintiff in relation to the second advance in the amount of $40,000. The plaintiff testified that he found his copy of that note in the course of collecting documents for his counsel, but it then went missing. The defendant does not dispute that this document was prepared and signed by him. He testified that he cannot now recall. I accept the plaintiff’s evidence that there was a promissory note in the same form in relation to the $40,000 advance.

9The plaintiff was not involved in the drafting of any of these documents. And the plaintiff did not seek legal advice in relation to any of the notes or related advances.

Demands for payment

10The plaintiff made a number of verbal requests of the defendant for payments against the two notes that are at issue. He testified that he talked to the defendant a number of times, asking for some money to be repaid, and the defendant would say that he would be receiving money and would repay him.

11The plaintiff testified that he has only received $500. The defendant testified that the $500 was actually a deposit on a failed truck purchase for his daughter, which he did not ask for back because the plaintiff had already given him so much money. It was not, in his view, a payment against the promissory notes.

12The plaintiff testified that on one occasion, the defendant said he had received $1.3 million and would be receiving another $1.3 million and would pay him $50,000. It was a long conversation during a car ride. The plaintiff was not sure when this took place, estimating that it was in the 2010 or 2011 timeframe. The plaintiff asked for the full amount owing plus interest, totaling approximately $150,000. He testified that at this point, the defendant “blew up” at him and refused to pay anything.

13Ultimately, the plaintiff retained a lawyer. The first written demand for payment was made by letter dated February 27, 2013, from counsel to the plaintiff to the defendant. The defendant replied on March 3, 2013, saying that the “matter will be attended to in accordance with the contract between Mr. Bolsover and myself.”

14As of the time of trial, no payments have been made other than the above-mentioned $500.

15The plaintiff further testified that the defendant did not actually use the money for the proper purpose ˗ that is, for his action against the CRA. The plaintiff believes he used it to buy a Rolls-Royce and to buy one or more farms. The defendant disputes the suggestion that he used the funds in these ways. At trial, the defendant introduced a brief of correspondence received by him that shows, among other things, that he retained counsel in relation to the claim against the CRA in 2008. The defendant also testified that he hoped that some humanitarian work he had done might assist with his claim against CRA, which is referred to in his brief of documents.

Discussion

16The main issue in this trial is whether the advances made by the plaintiff were loans that are now due and payable, or, as the defendant says, investments in his ongoing claim against the CRA for which payment is not yet due.

17Both of these gentlemen are of an age where they each testified there were things that they could not recall about the dealings between them. However, the plaintiff’s account of what happened is more consistent with the documents introduced as evidence at trial.

18The best evidence before me about the terms upon which the plaintiff advanced the $100,000 is the promissory notes themselves. They were drafted by the defendant’s accountant. The accountant was not actually present for any of the dealings between the parties giving rise to the two advances. It is reasonable to infer that the notes properly reflect the terms agreed to by the defendant. The defendant has acknowledged that he signed the promissory notes. And he then gave them to the plaintiff. The plaintiff had no involvement in their preparation.

19The first promissory note expressly provides a “promise to repay” the $60,000 24 months from its date, which would be by November 15, 2006. For the second advance, of $40,000, the deadline would be November 14, 2007. Those dates have passed, and demand has been made. Payment is due.

20These notes also say that repayment after 24 months is “without interest”, from which I conclude that no interest is due for those first two years.

21The note that refers to “Success” and provides for the payment of $250,000, is more consistent with the defendant’s position that the plaintiff was investing in the outcome of the CRA action. However, no claim is made in relation to that note in this action.

Limitation period

22At trial, the defendant repeatedly indicated that his accountant had told him he had a limitations argument, but that he had decided not to pursue that defence. It does not form part of his statement of defence, and no request was made for leave to amend, as would be required to advance that defence: Strong v. Paquet Estate (2000), 2000 CanLII 16831 (ON CA), 50 O.R. (3d) 70 (C.A.) at paras. 35 to 37.

Interest and costs

23No pre-judgment interest is payable for two years under the terms of the promissory notes, and no interest rate for the later period is either specified in the notes or the subject of trial evidence. The defendant spoke only generally about the plaintiff being entitled to interest once the obligation to repay arose. In the absence of evidence, the default rate under the Courts of Justice Act, R.S.O. 1990, c. C-43, is appropriate. The plaintiff is therefore entitled to pre-judgment interest, except for the first two years, at 1.3%.

24In the normal course, the plaintiff, as the successful party, should have his costs. He seeks $7,312.18 in partial indemnity costs, inclusive of disbursements and applicable HST. That amount is reasonable having regard for the course of the proceedings, the information in the Costs Outline and the principles applicable to party and party costs.

Judgment

25Judgment is therefore granted to the plaintiff in the amount of $99,500, plus costs in the amount of $7,312.18, with pre-judgment interest from November 15, 2006 on $59,500 and from November 14, 2007 on $40,000 at the rate of 1.3%. Post-judgment interest shall apply at the default rate of 3% under the Courts of Justice Act.

Justice W. Matheson

Released: May 28, 2015

CITATION: Bolsover v. Rahey, 2015 ONSC 3328

COURT FILE NO.: CV-13-482553

DATE: 20150528

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROBERT BOLSOVER

Plaintiff

– and –

CARL RAHEY

Defendant

REASONS FOR JUDGMENT