Court File and Parties

Court File No.: CV-12-447548 Date: 20160422 Ontario Superior Court of Justice

Between: Louise Talbot, Plaintiff/Moving Party And: Jeffrey Nourse and 2255588 Ontario Inc. and 2207500 Ontario Inc., Defendants/Responding Party

Counsel: Kenneth Alexander, for the Plaintiff/Moving Party Walter Kravchuk, for the Defendants/Responding Party

Heard: March 11, 2016

Lederer J.:

Endorsement

Endorsement

1The Notice of Motion before the court refers to this as a motion for summary judgment. The Factum filed in support of the motion refers to it as seeking “partial summary judgment”.

Background

2Louise Talbot (the plaintiff) and Jeffrey Nourse (the personal defendant) had worked together in the past. During August 2010, Jeffrey Nourse contacted Louise Talbot. As a result, two things took place. Louise Talbot agreed to assist Jeffrey Nourse financially and to come to the Toronto area to help him with his business.

3Louise Talbot alleges that, pursuant to two promissory notes, one valued at $200,000 and the other at $80,000, she loaned the total sum of $280,000 to Jeffrey Nourse. Louise Talbot did come here and joined the business. Both of the promissory notes are dated September 8, 2010. Although they both refer to payment “in full and final satisfaction of all principal and interest”, neither provides for interest to accrue. They both call for payment to be made from the “cash and receivable receipts that will be deposited on behalf of the company”. Payments were made between December 9, 2011 and January 26, 2012. The repayments totalled $152,157. On this basis, ($280,000 - $152,157) $127,843 remains to be paid.

4The relationship between the two parties did not fare well. In short, Jeffrey Nourse alleges that Louise Talbot acted in a manner that was directed to treating the business as if it was her own, denying or hiding his involvement and making use of its assets for her own purposes; in short, taking it over. In her affidavit, sworn June 27, 2013, Louise Talbot deposed that, on or about January 24, 2012, she was locked out of the business. She was not allowed to return to get any financial records or her computer.

5This action was commenced by Louise Talbot through a Statement of Claim that was issued on March 1, 2012. It seeks repayment of the monies alleged to be owed under the promissory notes, as well as:

• unpaid wages;
• the return of equipment said to have been loaned to Jeffrey Nourse and one of the corporate defendants;
• an order requiring the defendants to cease using the name “Renew Beauty Med Spa”; and,
• punitive damages in the amount of $500,000.

6On this motion, Louise Talbot asks only for an order that the money owing under the two promissory notes be paid. It is on this basis that it is said this is a motion for partial summary judgment.

7A Statement of Defence and Counterclaim was delivered on or about May 17, 2012. The counterclaim asks for a broad range of remedies including:

• damages of $2 million for breach of contract;
• breach of fiduciary duty, breach of confidence;
• other breaches of other obligations owed by Louise Talbot to the defendants;
• an injunction prohibiting the plaintiff from operating a business in competition with the defendants and making any use of any confidential information of the defendants;
• compelling the plaintiff to return property said to be owned by the defendants;
• orders that certain leases be recognized as belonging to the defendants; and,
• a certificate of pending litigation against “the Talbot Condos”.

The Promissory Notes

8The issues which touch on the motion for partial summary judgment are not complicated. There are two promissory notes. The two promissory notes are included in the Record. Jeffrey Nourse acknowledged that he signed the promissory note in the amount of $80,000. He does not contest its validity. However, he alleges that he did not sign the larger promissory note in the value of $200,000.

9Louise Talbot retained a handwriting expert. He prepared a report regarding signatures on the promissory notes. The expert provided the opinion that it was highly probable that the writer of the sample signatures he was given wrote all four of the principal signatures (as opposed to those of the witness) on the promissory notes. The writer of the sample signatures was Jeffrey Nourse.

10The witness to the signing of both promissory notes was Carla Larranaga. The record contains an affidavit sworn by her on April 30, 2014. Among other things, she deposed:

On or about September 8, 2010 both Jeff Nourse and Louise Talbot attended at the branch [of the bank] where I worked. This is the same Jeff Nourse who appears in the photo at Exhibit “B” and who was known to me as a customer of the Bank of Montreal. On or about September 8, 2010 Jeff Nourse signed the two Promissory notes of Exhibit “A” in my presence at the Bank of Montreal. My signature appears as the witness.

11Carla Larranaga was cross-examined. She was asked about a letter she had written saying that she was not a witness to and had not signed any promissory notes in the amount of $280,000 from Jeff Nourse to Louise Talbot. Carla Larranga did not deny that there was such a letter, although it was not produced to her, is not exhibited to her in cross-examination and does not appear to be included in the record which was before the court. There was a second letter. This one is dated October 4, 2012. It recants. Carla Laranga indicated that she signed the initial letter in circumstances where she “probably” did not read it and Jeff Nourse “came in telling [her that Louise Talbot] had forged my signature on a document for $280,000.” I note that, based on this recollection, Jeffrey Nourse referred to only one document, not two. She went on to say that Jeffrey Nourse had not shown her the documents he said existed. In the second letter, Carla Larranga apologized for having provided the first to Jeffrey Nourse. Throughout her cross-examination, Carla Larranga consistently and often confirmed that she had witnessed the execution of the two promissory notes. It was her signature on the notes (see Q. 76, Q. 102, Q. 114, Q. 125 and Q. 208 (Redirect)).

12Jeffrey Nourse was also cross-examined. He accepted that the $200,000 was transferred to his account but described it not as a loan but as an investment.

Summary Judgment Principles

13The process a judge is to go through in considering a motion for summary judgment was established in Hryniak v. Mauldin, 2014 SCC 7, 2014 S.C.C. 7, [2014] 1 S.C.R. 87, at para. 66:

On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring a trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

14Going no further than the evidence before the court, there could be a genuine issue requiring a trial. Does the court have to test the credibility of Carla Larranga? Moreover, counsel for the defendants argued that as a result of a failure of Louise Talbot to answer certain undertakings, there is an issue extant concerning the actual amount that has been paid in respect of the promissory notes.

15In the circumstances, using the new powers under Rules 20.04(2.1) and (2.2), I have little trouble accepting the evidence of Carla Larranga to the effect that the signatures on the promissory notes are hers and that she witnessed the signing of them by Jeffrey Nourse. There was no single promissory note valued at $280,000 as represented by Jeffrey Nourse when he told Carla Larranga that Louise Talbot had forged his name. In the absence of being shown the note on which his supposedly forged name appeared, this stands as an explanation for her to have misunderstood what was being referred to. It was careless of her not to have read the letter or considered its implications, but Jeffrey Nourse was a customer. She took him at his word. She should not have. Her statements, at the time she was cross-examined, that the signatures are hers are clear and unambiguous. It is not necessary that there be any further cross-examination on this subject.

16In any case, the issue is not whether Carla Larranga signed the promissory notes, but whether Jeffrey Nourse did. He denies it. The report of the handwriting expert says otherwise. The Report is accompanied by a curriculum vitae and, as required by r. 53.03(2.1) paragraph 7, a Form 53 through which the expert acknowledged his responsibility to the court. The expert is qualified and is to be taken to have understood that responsibility.

17The evidence of Carla Larranga and the expert are independent of, and corroborate, each other.

18The statement made by Jeffrey Nourse that the $200,000 was an investment does not add to any suggestion that there is a genuine issue requiring a trial. This assertion was not, so far as I am aware, referred to at any time prior to the cross-examination. It was not pleaded. There is nothing other than a bald assertion to substantiate this idea. To the contrary, it is contradicted by the presence of the two signed promissory notes. They are documentary proof of the debt and its legal foundation.

Unanswered Undertakings

19I put no stock in the proposition that there are unanswered undertakings that hinder the ability of the court in answering what amounts are owed under the promissory notes. The undertaking which, it is said, was not satisfied was to produce bank statements for the period of September 2010 to January 2012 from the following banks, for the following names:

a. TD accounts of Renew Beauty Canada; b. TD accounts of Renew Beauty Canada – U.S. account; c. Chase U.S. account of Renew Seattle; and, d. Louise Talbot TD Chase U.S. account.

20I begin by observing that the promissory notes required payments to be made from receipts “deposited on behalf of the company ” [emphasis added]. The only company the promissory notes refer to is the defendant, 2255588 Ontario Inc. In his affidavit, sworn April 16, 2014, Jeffrey Nourse describes this company as carrying on business under the names of Pure Med Spa and Renew Beauty Med Spas operating as beauty and medical spas in the Greater Toronto Area.

21In response to this undertaking, Louise Talbot has produced a Deposit Account History of Renew Canada for the period from November 1, 2011 to January 26, 2102. I understand “Renew Canada” to refer to “Renew Beauty Med Spas”. This covers the period over which payments were made on account of the promissory notes. For the purposes of the motion, counsel for Louise Talbot extracted from this record each of the payments that were made. They total the amount deducted from the value of the original loan to calculate the amount being claimed on this motion. There was a suggestion at the examination-for-discovery of Louise Talbot that money was directed from the United States to the account of the defendant, 2255588 Ontario Inc. If this was so, it does not suggest that any more money was used to further pay down the debt demonstrated by the promissory notes. It was suggested that some of these funds were returned to the United States (Dallas) (see: Continued Examination-for-Discovery of Louise Talbot June 26, 2014 at Q. 803-807).

22On the examination-for-discovery of Louise Talbot, counsel for the defendants proposed that they were primarily concerned about the money that flowed from the company’s account (2255588 Ontario Inc.) to the United States:

….we’re concerned that monies were mostly transferring from Canada into the U. S. …

(Continued Examination-for-Discovery of Louise Talbot, June 26, 2014 at Q. 808)

23If this is so, it does not reflect on the payment of the promissory notes; rather, it applies to the counterclaim which alleges that Louise Talbot absconded with money and other things that were not hers.

24To my mind, this was the proverbial “fishing expedition”. This is demonstrated by what counsel said next:

…You claim not. I accept that’s what you claim. We would like the trail so we can either demonstrate what you’re saying is correct or what we’re saying is correct.

(Continued Examination-for-Discovery of Louise Talbot, June 26, 2014 at Q. 808)

25Other records of other accounts have also been produced in response to the undertakings that were made. They are:

1. Renew Canada U.S. Account no. 7302929 (September 2010-January 2012)
2. Talbot Personal U.S. Account no. 7142589 (September and October 2010, November (partial records)
3. Talbot Personal Account no. 512235 (September 2008-September 2010)
4. Canadian Account for 2274378 Ontario Limited no. 5220598 (June 2011- December 2011)
5. Corporate U.S. Account no. 7303626 (June 2011-April 2012)

26None of these accounts were held in the name of 2255588 Ontario Inc., which is “the company” referred to in the promissory notes as the source of repayment. There was no suggestion that any of these records demonstrated any impact on the value of the outstanding debt under the promissory notes. This is far from sufficient to demonstrate a genuine issue requiring a trial.

27In making the submission that the failure to fully respond to undertakings is reason enough to refuse this motion and send the matter on to trial, counsel for the defendants relied on the case of Pritchard v. Roadknight, 2013 ONSC 1939.

28The case does not assist the defendants.

29As a favour to a friend, a man employed as an installer of oil tanks purchased one and installed it, on his own, without the knowledge or participation of his employer. Thereafter, there was a release of fuel oil and an action for damages. The employer of the installer was the defendant in a third party action that ensued. The employer (the third party) brought a motion for summary judgment on the basis that it was not involved and could not be vicariously liable for actions taken by the installer outside of his employment. As a preliminary matter, the defendant (the party which commenced the third party action) asserted that there were outstanding undertakings and refusals from the examination-of-discovery of the employer which bore on the merits of the motion. It was submitted that, on this basis, the third party should be precluded from bringing the motion. Despite the objection, the motion proceeded and summary judgment was granted.

30Nonetheless, counsel for the defendants relies on the following paragraph:

As a practical matter, if there are outstanding undertakings relevant to the respondent’s position on the motion, and where the provision of such information may support an argument that a trial is required, this may justify the adjournment or dismissal of a summary judgment motion. This is not because of any automatic rule that no motion can be brought by a party in default, but because the moving party would not have discharged its burden on the motion to prove that a trial is unnecessary. The failure of a party to comply with undertakings may warrant an adjournment of a summary judgment motion, or be relevant to its outcome, however this will depend on the particular context.

[Emphasis added]

(Pritchard v. Roadknight, supra, at para. 14)

31The use of the word “may” three times in this paragraph makes it clear that it is possible the failure to satisfy undertakings may lead to an adjournment or impact on the merits of a motion such as this one. There is no definitive rule calling for such a result. To the contrary, as the last words of the paragraph point out, it will depend on the specific facts of the particular case. In Pritchard v. Roadknight, the court observed that there was no demonstration that the information that would be forthcoming from satisfaction of the undertakings would materially affect the outcome of the motion. In fact, the information being sought was not relevant to the issue on the motion.

32So it is here. In this case, a substantial amount of information has been produced in response to the undertakings that were made. They include the records of the bank account of “the company” referred to in the promissory notes during the period payments were made (December 2011 and January 2012). It is said that only partial records have been produced for the preceding month (November 2011), but no particular connection has been made to those records and payments made in respect of the promissory notes. It is outside the period payments were said to have been made. The other accounts may be relevant to the counterclaim but not to the debt demonstrated by the promissory notes.

33Finally, reference was made to rule 20.08:

Where it appears that the enforcement of a summary judgment ought to be stayed pending the determination of any other issue in the action or a counterclaim, crossclaim or third party claim, the court may so order on such terms as are just.

Stay of Execution

34Even if summary judgment is to be granted, should execution be stayed pending the outcome of the trial? Equitable set-off is claimed and, on this basis, it is submitted that execution of any judgment should be stayed:

[T]he application of equitable set-off is subject to the equitable doctrine of clean hands. The courts will not allow a party to set-off ‘where there [is] an equity to prevent [the party from] doing so; that is to say, where the rights, although legally mutual, [are] not equitably mutual’: In re Whitehouse & Co. (1878), 9 Ch. D. 595, at p. 597; see also Stewart v. Bardsley, at paras. 54-61; Saskatchewan Wheat Pool v. Feduk, at para. 63; and Kelly R. Palmer, The Law of Set-Off in Canada (Aurora, Ontario: Canada Law Book Inc., 1993), at p. 66.

(Grand Financial Management Inc. v. Solemio Transportation Inc., 2016 ONCA 175, at para. 98)

35Over the course of this proceeding, the defendants have had four lawyers. This motion was originally to be heard on August 12, 2013. While the record does not show it, counsel advised it has been adjourned several times, generally to accommodate the defendants, sometimes to allow for the change of solicitors. The date today was peremptory to the defendants. The claim is a narrow one, dealing only with the promissory notes, without any implication on the wider elements of the failed business relationship between the parties. The counterclaim is a broad, seemingly comprehensive attack raising a range of complaints that reflect on the difficulties that arose between Louise Talbot and Jeffrey Nourse. In the circumstances, it is not appropriate to let the counterclaim hold up the claim on the promissory notes any longer. Equity (fairness) dictates otherwise. I point out that because the promissory notes do not call for the payment of interest, the defendants have had what amounts to free use of money that should have been returned to the plaintiff some time ago.

Disposition

36Judgment is ordered in favour of the plaintiff in the amount of $127,843. The remaining claims made in the action and the counter-claim, as a whole, are to continue. Pre-judgment interest is to be calculated from the date of the issuance of the Statement of Claim. Both pre-judgment interest and post-judgment interest are awarded, to be calculated pursuant to the Courts of Justice Act.

Costs

37No submissions were made as to costs. If the partiers are unable to agree I will consider written submission on the following terms:

1. On behalf of the plaintiff, within 15 days of the release of these reasons. Such submissions are to be no longer than four pages double-spaced, excluding any Bill of Costs, Costs Outline or case law that may be referred to.
2. On behalf of the defendants, within 10 days thereafter. Such submissions are to be no longer than four pages, doubled-spaced, excluding any Bill of Costs, Costs Outline or case law that may be referred to.
3. If necessary, in reply, on behalf of the plaintiff, no longer than 5 days thereafter. Such submissions are to be no longer than two pages double-spaced.

LEDERER J. Released: 20160422

Judgment Document

Judgment Document