COURT FILE AND PARTIES

COURT FILE NO.: 15-64227

DATE: 2015-12-30

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: HENRI NADEAU, Plaintiff

AND:

ANGELO CAPERELLI, JACQUES CHATELAIN, and 2292819 ONTARIO INC, Defendants

BEFORE: Honourable Justice Timothy Ray

COUNSEL: Hank Witteveen, Counsel, for the Plaintiff

Thomas Curran, Counsel, for the Defendants, Caperelli and 2292819 Ontario Inc.

HEARD: December 23, 2015

ENDORSEMENT

[1] This motion for summary judgement initially came on before me November 10, 2015 for argument. As is sometimes the case, as argument unfolded, the issues became clearer. I concluded that while the facts were not in issue, it was the inferences to be taken from the facts and the applicable legal principles that required more argument. In accordance with the philosophy of Hyrniak[^1], I further defined the legal issues on which I required further argument, confirmed the chronology of the facts, confirmed there was no issue requiring a trial, and adjourned it to today[^2]. I identified the legal issues as follows:

a. Can an action based on the assignment of a promissory note be based solely on an unwritten intention?

b. What effect, if any, is the assignment of September 1, 2015 on the assignment of November 1, 2011?

c. Is the action proscribed by the Limitations Act? On this issue, and this issue alone, the parties are at liberty to cross-examine the opposite party, if so advised.

d. Is the plaintiff entitled to a judgement against the defendants in accord with his statement of claim?

[2] The parties decided against expanding the evidential record for the issue c. above.

Can an action based on the assignment of a promissory note be based solely on an unwritten intention?

[3] The plaintiff’s position is that that the conduct of 111 and Nadeau in transferring possession of the note, giving notice of the assignment to Nadeau and commencement of this action in his name all demonstrate a valid equitable assignment of the note from 111 to Nadeau. In addition the Bills of Exchange Act supports the assignment. The defendants’ position is that it takes more than an intention to constitute an assignment; and that in this case the plaintiff’s evidence was not that there had been an intention, but that the promissory note had been omitted from the first assignment, had not become due at the time and had not crystallized.

[4] There is agreement between the parties that the criteria in the Conveyancing and Law of Property Act were not met and therefore there was no legal assignment. If an assignment took place, it can only be an equitable assignment. While the plaintiff may have formed the intention to assign the promissory note before commencing the action, he provided no evidence beyond his bare assertion. There is no other or confirmatory evidence such as past performance[^4], or concurrent written direction consistent with the assignment[^5]. “Something more”[^6] is required. Of note is that the assignment was clearly not irrevocable prior to the commencement of the action since 111 had been able to commence this action in its own name, but did not. The irrevocable nature of the assignment is an essential element. I conclude, however, that commencing the action May 7, 2015 (which I had previously incorrectly described as 2013) in the name of the plaintiff alone is consistent with irrevocability as of that date. The March 31, 2015 written demand for payment is also evidence consistent with the assignment. Both are “something more”.

[5] In summary, I find there was an equitable assignment; and that “something more”, as noted above, supports the bare expressed intention.

What effect, if any, is the assignment of September 1, 2015 on the assignment of November 1, 2011?

[6] The plaintiff’s position is that the assignment of September 1, 2015 is evidence of the intentions of 111 and Nadeau with respect to the promissory note as of November 1, 2011 when they believed all of the assets of 111 had been assigned to Nadeau. The defendants’ position is that the first assignment is unambiguous on its terms. Hence, parole evidence that might serve to create an ambiguity is inadmissible. The first assignment says precisely what it says, that it assigned merely any interest that might exist in a deposit paid on a failed asset purchase and sale. The second assignment declares itself to be an assignment, which it could not be to the extent that the assets purporting to be assigned had already been assigned. The second assignment, at its highest, is an assignment of those assets not assigned by the first Assignment.

[7] I am satisfied that the September 1, 2015 written assignment did not retroactively give the plaintiff standing to commence the action[^7]. I am however satisfied that an equitable assignment of the promissory note took effect March 31, 2015 when the written demand on the defendant was made.

Is the action proscribed by the Limitations Act?

[8] The plaintiff’s position is that the written or alternatively the equitable assignment had retroactive effect. The defendants’ position is that the last day for commencement of an action was July 20, 2015. On that day, the promissory note belonged to 111, not the plaintiff; and 111 did not commence an action on or before that day.

[9] The action was commenced May 7, 2015. On that date, plaintiff had the legal right to commence the action as the equitable assignment of the promissory note had taken effect. The last day for commencing the action was July 20, 2015. I therefore find that the action was not proscribed.

Is the plaintiff entitled to a judgement against the defendants in accord with his statement of claim?

[10] The plaintiff’s position is that he is entitled to judgement. The defendants’ position is that he is not.

[11] Having found that the plaintiff’s rights to commence this action were based on an equitable assignment not a legal assignment, the action must be in the name of the plaintiff and 111 as assignee and assignor. During submissions, the plaintiff asked that I amend the claim by adding 111 as a party plaintiff if I were to conclude that an equitable assignment existed. However, there was no motion material before me to support such a claim. The remedy he sought was nowhere in the motion material. While I am reluctant to grant the remedy, there is no prejudice to the defendant, and in many respects because the plaintiff is also the directing mind of 111, failure to join 111 as a party plaintiff smacks of a technicality. The philosophy of the Rules of Civil Procedure relating to the adding of parties is that all necessary parties should be present. It is discretionary. I exercise my discretion in the interests of justice so that the claim is not seen to be defeated purely on the basis of a technicality[^8]. The order is nunc pro tunc.

[12] Judgement will therefore be granted to the plaintiff(s) against the defendants in the amount of $70,000 plus prejudgement interest.

Costs

[13] In light of the failure of either of the parties to plead virtually any of these issues, nor to adequately raise them in the motion material, I am reluctant to award costs. However, if the parties wish an order for costs, they may make submissions of two pages or less within 15 days and with a further 5 days for reply.

Date: December 30, 2015

[^1]: Hryniak v. Mauldin,(2014), 2014 SCC 7, 366 D.L.R.(4th) 641,46 C.P.C. (7th) 217 (S.C.C)

[^2]: 2015 ONSC 6944

[^3]: Conveyancing and Law of Property Act, R.S.O. 1990, c. C. 34, section 53(1)

[^4]: Levine v. Davies (1998), 1998 3606 (ON CA), 37 O.R.(3d)252(C.A.).

[^5]: Benedict v. Ohwistha, 2011 ONSC 18.

[^6]: Law Society of Upper Canada v. Mazzucco, 2009 30679 @ paragraph 20

[^7]: Moravac v. Moravac (1982), 1982 1685 (ON SC), 26 R.F.L. 189 (Ont.U.F.C.)

[^8]: Rules of Civil Procedure, R.R.O. 190, Reg.194, Rule 5.04 as amended