ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-11-428098
DATE: 20151124
BETWEEN:
ROSARIO GRECO
Plaintiff
– and –
FELICE FRANO and THE ESTATE OF GIUSEPPA FRANO, deceased
Defendants
Joseph F. Lo Greco, for the Plaintiff
John Weingust, for the Defendants
HEARD: October 5, 6 & 7, 2015
REASONS FOR JUDGMENT
Hood J.
nature of the Claim
[1] On Monday May 5, 2003 a cheque in the amount of $90,000 cleared the joint account of the plaintiff, Rosario Greco ("Mr. Greco"), and his wife, Anna Greco ("Mrs. Greco").
[2] At issue in this trial is firstly whether this $90,000 was a loan or a gift made to the defendant, Felice Frano ("Felice"), the son-in-law of Mr. & Mrs. Greco, and his wife, Giuseppa Frano ("Giuseppa"), the Greco's daughter, and secondly whether the claim is statute-barred.
[3] The claim was issued on June 6, 2011 against Felice and the estate of Giuseppa, Guiseppa having passed away on June 9, 2009. In it, Mr. Greco claimed that he had loaned Felice and Giuseppa $100,000 on or about May 5, 2003. Why the claim was for $100,000 as opposed to $90,000 was never made clear at trial. In argument, counsel for the plaintiff acknowledged that the amount in issue was $90,000, represented by the cheque. Also during argument, counsel for the plaintiff advised for the first time that the claim had been discontinued as against the estate of Giuseppa, although he did not advise when this in fact took place. The solicitor's certificate filed when the matter was set down for trial made no mention of the status of the claim against the estate, whether it had been discontinued or whether the estate was in default.
[4] I find that the advance from the plaintiff was a loan. However, I find that the claim is statute-barred and accordingly I must dismiss the claim.
Factual Background
[5] At trial, Mr. Greco was 90 years old. In 2003 when the advance was made, he would have been approximately 78 years old.
[6] He testified and I find that in 2003, he sold his home at 130 Nelson Street, Scarborough, where he lived with his wife. He and his wife then moved in with their daughter, Giuseppa, and Felice. There was conflicting evidence as to why they sold 130 Nelson – whether they had to because they wouldn’t be able to renew their existing mortgage with Royal Bank, or whether they did so in order to live together, in their old age, with Giuseppa and Felice. This conflict in the evidence does not really matter.
[7] What matters is that from the sale of 130 Nelson, after paying off the Royal Bank mortgage and other closing costs, there were sale proceeds of $119,699.95. This amount went into the joint account of Mr. & Mrs. Greco on May 2, 2003.
[8] The only income which Mr. & Mrs. Greco had were their government pensions and any money Mr. Greco made from the occasional carpentry job. The sale proceeds from their home was their major asset. As Mr. Greco put it during cross-examination, he was no wealthy man, he was no Berlusconi, the Italian media tycoon and politician.
[9] From their income, they paid a monthly rent to Giuseppa and Felice. This is another example of where the evidence of Mr. & Mrs. Greco and Felice conflict. Felice testified that they never paid rent to him. If by this he meant he himself personally never received the rent, or whether he meant that he and Giuseppa never received rent, I cannot say, as this was not explored further in his examination-in-chief or cross-examination. If the former, perhaps he is right in that the rent was never given directly to him. If the latter, I prefer the evidence of Mr. & Mrs. Greco. The bank records show regular cash withdrawals on a monthly or bi-monthly basis from Mr. & Mrs. Greco’s bank account which substantiates their testimony of making regular monthly rental payments.
[10] This issue of rent again took up much of the evidence but at the end of the day is not overly relevant to the issue of whether the advance was a loan or a gift. The only time the issue of rent became at all relevant was when counsel for Felice asked Mrs. Greco why they would still be paying rent if they had already advanced $90,000 to Giuseppa and Felice. She answered that the fact of the advance had nothing to do with the rent. As she put it, “rent was rent and the loan was a loan”. They were two very different things for her and her husband.
[11] The rent was always paid in cash and varied from $500.00 to $700.00 monthly. Mr. Greco used both cash and his Visa card to buy things such as groceries for the house. He typically made cash payments against his Visa on a monthly basis.
[12] Mr. & Mrs. Greco testified that almost immediately after the sale of 130 Nelson, Giuseppa approached them asking if they could advance her and Felice some of the sale proceeds. They testified that Giuseppa said Felice needed the money and asked if some of the sale proceeds could be loaned to them. Mr. & Mrs. Greco were never told why the money was needed by Felice. They agreed to lend him $90,000. Giuseppa filled out the cheque for $90,000 and Mr. Greco signed it. It was then presented to Giuseppa and Felice in the dining room on May 4, 2003, by Mr. & Mrs. Greco. Upon presentation of the cheque Felice began to cry. The cheque was not tendered in evidence. It apparently no longer exists. Inquiries had been made of the bank but apparently the cheque has been destroyed.
[13] Felice testified that when the cheque was presented Mr. Greco said he “deserved more”, and he was, “sorry I cannot give you more”. Emphasis was placed on this statement in argument by Felice, and especially on the word “give”. This suggested statement was not put to Mr. Greco when he was in the witness box, contrary to what is known as the rule in Browne v. Dunn (1893), 1893 65 (FOREP), 6 R. 67 (H.L.). Mr. Greco’s counsel did not object to it when Felice gave this evidence. Accordingly, I let it in. Nor was Mr. Greco called in reply to address this evidence. Having said that, I find the alleged statement to be immaterial. Even if it was said, the use of the word “give” could equally mean that Mr. Greco was sorry he was unable to give more money as a loan rather than an outright gift. The words I find to be equally consistent with a loan or with a gift.
[14] All of the discussions surrounding the advance and its terms, as admitted by Felice in his evidence, were between Mr. & Mrs. Greco and Giuseppa. He was not involved.
[15] There is no evidence in writing as to whether this was a gift or a loan. The plaintiff, while arguing that the advance was a loan, had nothing in writing as to its terms or when it would be repayable. From the time of the advance in May, 2003 there was never any acknowledgment of the advance by Felice or Giuseppa. Nor was any interest paid on the advance or any repayment of any portion of the principal amount made.
[16] Giuseppa died on June 9, 2009. In April or May, 2010, Mr. & Mrs. Greco moved out of Felice’s home and went to live with their son, Andrea. There was a lot of evidence as to why Mr. & Mrs. Greco moved out. Mr. Greco testified that Felice told him the house needed to be painted and they had to leave. In his view, he was thrown out of the house following Giuseppa’s death. Felice testified that following the death of his wife, he could no longer stay in the house. He told Mr. & Mrs. Greco this, and said that when they were ready to move, the house would be sold. Why they moved out is not relevant.
[17] There was a lot of evidence over the efforts made by Felice’s son, Rosario Frano, and his daughter, Anna Agosta, over their efforts to assist their grandparents, Mr. & Mrs. Greco, in finding a condominium or rental apartment that they could carry financially and move into after they were told they had to move out. This evidence was also irrelevant to the issue of whether the advance was a loan or a gift.
[18] Mr. Greco testified that when he was told he and his wife had to move out, he wanted to buy a house, but without the $90,000 he could not do so. He waited a few months after Giuseppa’s death and then approached Felice asking for the return of the $90,000. He testified that when he asked Felice for the repayment of the loan, he was told by Felice that he had no money. Mr. Greco then asked for at least a partial payment of the $90,000 and was told by Felice that he would not give him a lira.
[19] Mr. Greco acknowledged in his evidence in chief and confirmed in cross-examination that this was the first time he ever asked Felice for the return of the $90,000. Between May 4, 2003, when the money was advanced and June 9, 2009 when Giuseppa died, Mr. Greco admitted he never spoke about the money with Felice and never demanded repayment. Formal demand for repayment was made on September 23, 2010 by Mr. Greco’s lawyer. This demand was marked as Exhibit 3 at the trial.
[20] The claim was issued on June 6, 2011.
[21] As set out above, much of the evidence given was clearly irrelevant to the issue of whether the advance was a loan or a gift. Another example concerned the day that Mr. & Mrs. Greco moved out of the house following Giuseppa’s death. Both sides gave evidence in chief and there were cross-examinations as to who was there, and when, what was said, who moved what furniture, who helped, who did not help, and who packed what items in boxes. Why any of this mattered was never made clear to me. It was never referred to in argument.
[22] A further example concerned evidence over who actually did construction or renovation work in various houses where the parties lived from time to time. Why this mattered to the real issue was again never made clear in argument, nor was there any documentation produced by either side in relation to this.
[23] There was not much conflict on relevant evidence, but where there was any such conflict, I accept the evidence of Mr. & Mrs. Greco over that of Felice or his son, Rosario Frano. Felice in cross-examination often refused to initially answer questions, or when he did, answered argumentatively with his own question or gave answers which were not responsive. His testimony at trial also conflicted with his prior testimony at his examination for discovery.
[24] One such example concerned what happened to the $90,000 after it had been advanced. When Felice was asked at trial as to what he did with the money, he said he never saw the money, he never had the money, and he had no idea where the money went as it was Giuseppa’s. After his discovery answers were put to him where his counsel admitted on discovery, with no disavowal from Felice, that he and Giuseppa received the money and that he put it in a joint account with his wife, Felice then admitted that it did in fact go into a joint account with his wife, and that he and her used it. He did maintain that he could not remember what it was used for.
[25] I am left with the impression that Felice's evidence has been reconstructed or rationalized in order to coincide with his interests in this action.
[26] Felice’s son, Rosario, gave evidence. He seemed to be cut from the same cloth as his father. In cross-examination he too was argumentative, answered questions with his own question, or gave non-responsive answers. Having said that, I find his evidence as being irrelevant to the issue of whether the advance was a loan or a gift.
[27] Felice's daughter, Anna, also gave evidence. Contrary to her father and brother, her evidence was balanced and forthright. However, it too was irrelevant to the issue of whether the advance was a loan or a gift.
Analysis
[28] Equity presumes bargains not gifts, see: Colangelo v. Amore, 2010 ONSC 5657, paras 59 - 62. As a result, when as in this instance, money is advanced to the defendant, the onus is upon the defendant to rebut the presumption that this advance was a loan. The burden is the general standard of proof on a balance of probabilities applicable to all civil cases, but it is a burden nonetheless that must be met by the defendant, Felice. Mr. Greco does not have to prove the advance was a loan. Felice has to prove the advance was a gift from Mr. Greco. It is not enough for Felice to say that he intended to receive the $90,000 as a gift. He must prove that both he and Mr. Greco knew and intended the $90,000 to be a gift rather than a loan.
[29] As previously stated, I accept Mr. & Mrs. Greco’s evidence over that of Felice’s. Moreover, Felice failed to put forward any evidence to suggest that this was a gift, other than the one statement allegedly made by Mr. Greco. I do not accept that Mr. Greco said this, but even if he did, it is ambivalent and does not assist Felice in meeting the evidentiary burden required.
[30] Felice had the evidentiary burden to prove that this was a gift. He did not meet it. Even though the plaintiff was not required to prove that this was a loan, the evidence establishes that it was. The size of the advance from people with limited assets is the most telling piece of evidence. I find it to be implausible that an elderly man of limited means would gift approximately 75% of his assets. The plaintiff’s position that he loaned the $90,000 makes sense. A gift does not.
[31] There was nothing in writing to support that this was a gift. Recipients of advances such as this, if they want to ensure that they do not have to repay the advance, should put it in writing or have some other evidence to support it being a gift rather than a presumed loan.
[32] I therefore find for the reasons given that the $90,000 was not a gift but was in fact a loan.
[33] However, Felice pleaded that the action is barred pursuant to s. 4 of the Limitations Act R.S.O. 2010. There is no Limitations Act R.S.O. 2010. When counsel for Felice was asked about this during argument, he then argued that the claim was barred by the Limitations Act, 2002 c. 24, Sched. B. s. 4. He argued that the claim was issued two years beyond when the money was advanced. The plaintiff in response argued that the Limitations Act, 2002 applied, and that the limitation period commenced following demand. Since the claim was issued within two years from the demand letter of September 23, 2010, and also within two years from the date Mr. Greco asked Felice, following Giuseppa’s death, for the return of the $90,000, that the plaintiff was not statute barred.
[34] No case law on this issue was provided to me by either counsel. Nor were the appropriate statutes provided or actually reviewed by counsel. The analysis by counsel of the limitation issue basically consisted of what is set out in the preceding paragraph. It is of little help.
[35] As was made clear in Hare v. Hare 2006 41650 (ON CA), [2006], 83 O.R. (3d) 766 (C.A.), the cause of action on a demand loan runs from the date of advancement. In this case, the date of advancement was May 4, 2003.
[36] Although the decision in Hare followed long standing law, there was a great deal of concern about the decision. As a result, the Limitations Act, 2002 was amended by the addition of s. 5(3) so that with respect to a demand obligation, the limitation period begins to run on the first day on which there is a failure to perform following the demand for performance. However, as a result of s. 5(4) of the Limitations Act, 2002, this only applies in respect of a demand obligation created on or after January 1, 2004.
[37] The loan to Felice and Giuseppa has no terms and no date for repayment. As such, it is a demand obligation, see: Azman v. Viola, 2010 ONSC 6455 at paras. 39 and 41, and Skuy v. Greennough Harbour Corporation, 2012 ONSC 6998 at para. 31. The demand obligation was created when the loan was advanced on May 4, 2003.
[38] Being created prior to January 1, 2004, the Limitations Act c. L. 15 applies, and specifically s. 45(1)(g), which provides for a six-year limitation period from the date of advancement. Accordingly, Mr. Greco’s claim became statute-barred after May 4, 2009. The claim was not issued until June 6, 2011. As admitted by Mr. & Mrs. Greco, no interest was paid nor was any acknowledgement of the debt made between May, 2003 and May, 2009 which would have had the effect of extending the limitation period. For this reason the claim must be dismissed.
[39] The defendant is entitled to costs. I have been provided with a bill of costs from both the plaintiff and the defendant. The defendant seeks costs of $21,441 representing costs of $6,441 for the fees and disbursements prior to trial, and $15,000 as a counsel fee for a three-day trial. The plaintiff’s bill of costs, by contrast, amounts to $40,375 on a partial indemnity basis. Clearly the amount the defendant is seeking is well within the expectation of the plaintiff.
[40] Having said that, I find the costs submitted for both sides to be excessive. While this trial took three days, it should not have. Much of the evidence was irrelevant to the two issues and there were a limited number of exhibits. There was a dearth of case law on both issues. The parties argued the incorrect Limitations Act. This should have been at most a two-hour summary judgment motion on the issue of whether the claim was statute-barred, not a three-day trial.
[41] In exercising my discretion under s. 131 of the Courts of Justice Act and considering the factors as set out in Rule 57.01, I fix the defendant’s costs in the amount of $10,000 inclusive of HST and disbursements payable by the plaintiff within 30 days of today’s date.
Hood, J.
Released: November 24, 2015
COURT FILE NO.: CV-11-428098
DATE: 20151124
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROSARIO GRECO
Plaintiff
– and –
FELICE FRANO and THE ESTATE OF GIUSEPPA FRANO, deceased
Defendants
REASONS FOR JUDGMENT
Hood, J.
Released: November 24, 2015