CITATION: The Bank of Nova Scotia v. Renatoneil Consultants Ltd., 2017 ONSC 5473
COURT FILE NO.: CV-09-21-76-SR
DATE: 20170914
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
The Bank of Nova Scotia
Alexandra Tratnik, for the Plaintiff
Plaintiff
- and -
Renatoneil Consultants Ltd., operating as Wave Zone, Lois Virgo and Jeremy Virgo also known as Jeremy Renato Virgo, Defendants
Donald Bodkin, for the Defendants
Defendants
HEARD: August 15, 2017
REASONS FOR JUDGEMENT
PETERSEN J.
[1] This is a Motion by the Plaintiff, The Bank of Nova Scotia (“the Bank”) for summary judgement against the Defendant Lois Virgo for payment of $12,087.05, plus pre-judgement interest at the rate of 4.5% per annum from April 9, 2009.
BACKGROUND FACTS AND PROCEDURAL HISTORY
[2] The Defendant Lois Virgo is the ex-wife of the co-Defendant Jeremy Virgo, who is the sole officer and director of the corporate co-Defendant Renatoneil Consultants Ltd. (hereafter “Renatoneil”). Mr. and Ms. Virgo were married in January 2000, separated in September 2008 and divorced in May 2012.
[3] Ms. Virgo was never personally involved in Mr. Virgo’s business ventures. She has never been an officer, director or shareholder in Renatoneil and has not had any role in managing its affairs.
[4] The Bank provided Renatoneil with a business loan in the amount of $72,000 pursuant to a credit agreement (“the Loan Agreement”) dated November 29, 2004. The loan was repayable in full upon written demand by the Bank and in the event of default thereunder.
[5] The Bank required security, which the Loan Agreement indicates was provided by Mr. Virgo in the form of security interest in equipment, goods and leaseholds. The Loan Agreement also states: “Personal guarantee for $18,000.00 from Lois Virgo, supported with independent legal advice.”
[6] The Loan Agreement required any third party guarantor to sign the Bank’s standard guarantee form. Ms. Virgo signed the requisite form (hereafter the “Guarantee”) on February 2, 2005 in the presence of Yolande Whitely, a lawyer practising in Jamaica, who witnessed Ms. Virgo’s signature and signed a Certificate of Independent Legal Advice (hereafter the “ILA Certificate”).
[7] The Guarantee is two and a half pages long. It specifies that it shall be governed by the laws of the province in which Renatoneil’s main account with the Bank is kept, which the parties agree is Ontario.
[8] A portion of the first paragraph of the Guarantee is struck out by hand as follows:
IN CONSIDERATION OF THE BANK OF NOVA SCOTIA (herein called the “Bank”) agreeing to deal with or to continue to deal with RENATONEIL CONSULTANTS LTD. (herein called the “Customer”) the undersigned and each of them, if more than one, hereby jointly and severally guarantees payment to the Bank of all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by the Customer to the Bank or remaining unpaid by the Customer to the Bank, whether arising from dealings between the Bank or from other dealings or proceedings by which the Bank may be or become in any manner whatever a creditor of the Customer, and wherever incurred, and whether incurred by the Customer alone or with another or others and whether as principal or surety, including all interest, commissions, legal and other costs, charges and expenses (such debts and liabilities being herein called the “guarantee liabilities”), the liability of the undersigned hereunder being limited to the sum of EIGHTEEN THOUSAND dollar with interest from the date of demand for payment at the rate set out in [below].
[9] The margin beside the redacted phrase is inscribed with what appears to be Ms. Virgo’s initials.
[10] The Guarantee stipulates that the rate of interest payable by the guarantor from the date of demand for payment is the Bank’s prime rate of interest at the time of demand plus 2% per annum. It further provides that demand for payment “shall be deemed to have been effectually made when an envelope containing such demand addressed to [the guarantor] at the address of the [guarantor] last known to the Bank is posted, postage prepaid, in the post office.”
[11] The ILA Certificate is addressed to the Bank and dated February 2, 2005 (the same day that Ms. Virgo executed the Guarantee). It is signed by Ms. Whitely and stamped “Yolande J. Whitely, Attorney-at-Law”. Ms. Whitely’s address in Jamaica is printed on the document under her signature. The Certificate reads:
On this 2nd day of February, 2005, I was consulted by Lois Virgo in her presence alone as to the effect of her executing a Guarantee of payment to the Bank of the present and future debts and liabilities of Renatoneil Consultants Ltd. To the bank limited to $18,000.00, copies of which are attached hereto.
I explained to her the nature of the document(s) described above and advised her fully as to the liability which she would incur by executing it. I also advised her fully as to the manner in which such liability could be enforced by the Bank. She has informed me and I am satisfied that she fully understands the nature and effect of executing the document(s) and that in executing the document(s) she is acting freely and voluntarily and not under any undue influence exercised by the officers, employees or agents of Renatoneil Consultants Ltd. or by any other person.
I have given this advice to Lois Virgo as her solicitor and in her interest only and without regard to or consideration for the interest of Renatoneil Consultants Ltd., the Bank or of any other person. I am not acting on behalf of Renatoneil Consultants Ltd., the Bank or any other person in connection with this matter.
[12] Ms. Virgo also signed the ILA Certificate, acknowledging that the statements made in the certificate “are true and that Yolande Whitely in advising me herein was consulted by me as my personal solicitor and in my interest only.” Ms. Virgo’s signature on the ILA certificate is witnessed by Ms. Whitely.
[13] Ms. Virgo deposed that, while visiting her parents in Jamaica in late January 2005, she received an urgent call from Mr. Virgo informing her that he had arranged bank financing for one of his businesses and that everything had been approved but the Bank required her signature on a couple of documents since she was his spouse. She was advised by Mr. Virgo that her signature was “all that was need (sic) for the loan to be processed, that he required the funds in order to take care of some long standing and urgent matters, and that upon the Bank receiving the said documents, funds would be released to him.” Mr. Virgo sent her the documents pertaining to the Bank of Nova Scotia business loan and arranged for her to attend at a lawyer's office in Jamaica to have them witnessed.
[14] Ms. Virgo’s evidence regarding the meeting with the lawyer is as follows:
Ms. Whitely, briefly reviewed the document which Mr. Virgo sent to me with me, witnessed my signature on the said document and in approximately fifteen to twenty minutes after arriving at her office, I departed her office and couriered the signed documents back to Mr. Virgo in Toronto.
[15] Mr. and Ms. Virgo’s marriage broke down in September 2008. She moved out of the matrimonial home. The two of them have had little, if any, contact since their separation.
[16] In or about January 2009, Renatoneil defaulted on its monthly payments to the Bank pursuant to its contractual obligations under the Loan Agreement. It also defaulted on other payments owed to the Bank pursuant to a credit card agreement executed in 2006 and a line of credit obtained in 2008.
[17] On April 9, 2009, the Bank’s lawyer wrote to Renatoneil, demanding payment of its outstanding indebtedness pursuant to the Loan Agreement (which at that time was $12,087.05), the credit card agreement ($7,661.77) and the line of credit agreement ($17,982.52). The Bank demanded payment in full by April 24, 2009, failing which it would take proceedings to enforce its security.
[18] The Bank’s lawyer also wrote to Ms. Virgo on April 9, 2009. The letter was delivered by registered mail to Renatoneil’s corporate address. It sets out Renatoneil’s total indebtedness to the Bank (in excess of $37,700), reminds Ms. Virgo that she guaranteed the indebtedness to a maximum of $18,000 on February 2, 2005, and demands full payment from her of the amount that she guaranteed, plus interest at the Bank’s prime rate plus 2.75%. (As noted above, the Guarantee signed by Ms. Virgo stipulated interest at the rate of the Bank’s prime rate plus 2.0%.) The letter states,
If payment in full of the Indebtedness plus applicable interest and costs to the date of payment, or, arrangement for payment satisfactory to the Bank, are not made forthwith, the Bank shall be obliged to take such lawful proceedings and remedies as it considers necessary and appropriate to ensure repayment of your obligation.
[19] Ms. Virgo did not receive this correspondence. She and Mr. Virgo had separated prior to the delivery of the Bank’s demand letter, which was sent to Renatoneil’s corporate address. She had no involvement in Renatoneil’s affairs and did not know that Renatoneil had defaulted on its payments or that the Bank was seeking payment from her as guarantor.
[20] Ms. Virgo did not make any payments to the Bank in respect of Renatoneil’s indebtedness.
[21] The Bank commenced the within action against Renatoneil, Mr. Virgo and Ms. Virgo on May 15, 2009. Ms. Virgo did not file a Statement of Defence. A default judgement was obtained by the Bank on July 20, 2009, ordering Ms. Virgo to pay the Bank $12,240.91, with post-judgement interest thereon at the rate of 4.75% per annum. The Bank filed a Writ of Execution against Ms. Virgo in or about September 2009.
[22] Ms. Virgo applied for a divorce from Mr. Virgo in December 2011. She did not include her liability to the Bank (pursuant to the default judgement against her) in her Net Family Property Statement. In her affidavit responding to this motion, Ms. Virgo deposed that, at the time of her application for divorce, she had “no idea nor the slightest notion” that she was “saddled with Mr. Virgo’s Bank of Nova Scotia business loan” or that the Bank had obtained a default judgement against her in July 2009. This evidence is not contested by the Bank.
[23] On May 18, 2014, Ms. Virgo entered into an agreement of purchase and sale for a townhome. Prior to the closing of that real estate transaction, an execution search was conducted and it revealed a Writ of Execution in favour of the Bank against Ms. Virgo. It was only then (toward the end of May 2014) that she learned of the Bank’s 2009 default judgement against her pertaining to Renatoneil’s indebtedness and the Guarantee that she signed back in 2005.
[24] Ms. Virgo’s counsel contacted the Bank's lawyer in early June 2014. Following a telephone discussion, he wrote to the Bank’s lawyer on June 25, 2014, advising that Ms. Virgo “has no knowledge of the details of your client’s loan nor its proceedings against her” and requesting copies of various documents, including the Bank’s Statement of Claim, any Affidavits of Service and the default judgement.
[25] On June 27, 2014, Ms. Virgo brought a motion to set aside the default judgement against her and to have the corresponding Writ of Execution withdrawn. The motion was successful. Justice Tzimas held, in an Endorsement dated March 28, 2017, that the default judgement was a nullity and should be set aside as a matter of right because it had been “irregularly obtained”. Specifically, Justice Tzimas noted the Bank’s acknowledgment that Ms. Virgo had not been served personally with the Statement of Claim. Justice Tzimas held that the Bank, as a sophisticated party, ought to have known that an originating process must be served personally on a defendant and if it “did not discover the defect in service in 2009, it certainly learned of the defect in 2014.” In addition to declaring the default judgement a nullity, Justice Tzimas also ordered that the Writ of Execution be withdrawn, that all enforcement proceedings be stayed, and that Ms. Virgo be granted leave to file a Statement of Defence.
[26] Ms. Virgo served and filed a Statement of Defence on June 15, 2017, in which she pleaded that she had no knowledge of her co-defendants' business activities; that the Guarantee upon which the Bank relies was not given voluntarily, free from duress, or with the benefit of truly independent legal advice; that the advice given to her by Ms. Whitely “in respect of the Canadian Small Business Financing Act, the Loan and the nature and consequences of each upon her under Ontario law were not provided by a person qualified to render legal advice under Ontario law”; and that she was so ill-informed about the liabilities arising from the Guarantee that she did not include them in her equalization calculation in her divorce proceedings.
[27] The within Motion for summary judgement was commenced by the Bank on June 27, 2017.
SUMMARY JUDGEMENT PROCESS
[28] As set out in Rule 20.04(2)(a) of the Rules of Civil Procedure, the question before me is whether Ms. Virgo’s defence to the Bank’s action raises a genuine issue requiring a trial. According to the roadmap provided by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87 (at para.66), I am required to make an initial determination of this question based only on the evidence before me, without using the fact-finding and "mini trial" powers set out in Rules 20.04 (2.1) and (2.2). Only in the event that I find there appears to be a genuine issue requiring a trial should I then consider whether a conventional trial can be avoided, without prejudicing the interest of justice, by using the fact-finding and “mini trial” powers.
[29] Justice Karakatsanis, writing for the Supreme Court in Hryniak, supra, observed:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgement. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
These principles are interconnected and all speak to whether summary judgement will provide a fair and just adjudication. When a summary judgement motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.
[30] On a motion for summary judgement, the responding party must "put her best foot forward" and provide the court with her best evidence to support her position that judgement should not be granted against her. See Business Development Bank of Canada v. 1458314 Ontario Inc., 2005 1085 (ON SC). As Justice Brown noted in Nadeau v. Peters, [2015] O.J. No.4109 (S.C.J.), at para.37, “A party is not entitled to sit back and rely on the possibility that more favorable facts may develop at trial.”
ANALYSIS
[31] Ms. Virgo argues that, given her relationship with Mr. Virgo and the circumstances in which the Guarantee was obtained, the Bank either knew or ought to have known that she was vulnerable to undue influence and it therefore had a duty to ensure that her consent to the Guarantee was informed, voluntary and provided with the benefit of independent legal advice. She submits that the Bank failed to discharge this duty because of irregularities and deficiencies in the legal advice provided to her by Ms. Whitely. She further submits that these irregularities and deficiencies give rise to genuine issues requiring a trial.
[32] The facts of this case can be readily distinguished from those in Carevest Capital Inc. v. Starserra Homes (Riverside) Ltd. et al., 2009 25976 (O.S.C.J.), upon which Ms. Virgo relies. In the Carevest case, the plaintiff (creditor) was aware that the defendant (guarantor) and her co-defendant husband (debtor) were undergoing disintegration of their marriage and experiencing crippling financial difficulties at the time the guarantee was signed. The creditor also knew that the debtor's wife was actively resisting giving the guarantee. In the case before me, Mr. and Ms. Virgo's marriage was not in a precarious state at the time the Guarantee was signed and there is no evidence that the Bank was aware of any circumstances of undue influence affecting Ms. Virgo's consent.
[33] Ms. Virgo is not, however, required to prove that the Bank had actual knowledge of facts giving rise to undue influence. As Associate Chief Justice Osborne stated in Bank of Montreal v. Duguid (2000), 2000 5710 (ON CA), 47 O.R. (3d) 737 (C.A.), writing for the majority of the Court of Appeal at para.16, “Constructive notice [to a third party of the prospect of undue influence] may be established by a close relationship between the parties -- such as husband and wife -- coupled with a manifestly disadvantageous transaction."
[34] The transaction at issue in this case was manifestly disadvantageous to Ms. Virgo. By signing the Guarantee, she became personally liable for payment of up to $18,000.00 of the present and future debts of Renatoneil, a company about which she knew very little and in which she had no managerial involvement. In these circumstances, the existence of a marital relationship between her and Mr. Virgo (the directing mind of Renatoneil) ought to have alerted the Bank to the prospect of undue influence. The Bank may therefore be fixed with constructive notice of potential undue influence, which triggers an obligation on the part of the Bank to take reasonable steps to ensure that Ms. Virgo's consent to the Guarantee was not induced by undue influence.
[35] In order to succeed in her defence to this action, Ms. Virgo must establish (1) that the Bank failed to take reasonable measures to ensure that her consent was voluntary and informed, and (2) that the Guarantee was procured by undue influence, either actual or presumed. (See Duguid, supra, at paras.16 and 19.) A spousal relationship does not automatically give rise to a presumption of undue influence, but where the impugned transaction is clearly detrimental to a claimant wife, undue influence will be presumed if she can demonstrate that she trusted her husband, followed his directions and generally left financial decisions to him. (See Duguid, supra, at para.19.)
[36] There is no evidence before me that Ms. Virgo reposed this degree of trust and confidence in Mr. Virgo in respect of financial matters. Theirs was not a traditional marriage in which she left all financial decisions to her husband. Although she had no knowledge of or involvement in his business ventures, there is no evidence that he controlled either her finances or their mutual personal finances. There is no evidence that she generally followed his advice and directions with respect to financial affairs. On the contrary, she deposed that, during their marriage, they maintained largely separate finances. There is nothing to suggest that Mr. and Ms. Virgo had the kind of relationship that would give rise to a finding of presumed undue influence.
[37] Even if their relationship were such that it gave rise to a presumption of undue influence, that presumption would be rebutted on the facts of this case. Proof that a spousal guarantor received independent legal advice typically rebuts any presumption of undue influence. (See Duguid, supra at para.24.).
[38] The Bank required that Ms. Virgo obtain independent legal advice. Ms. Virgo consulted Ms. Whitely for advice regarding the Guarantee. Ms. Whitely certified that, "She [Ms. Virgo] has informed me and I am satisfied that ... she is acting freely and voluntarily and not under any undue influence exercised by the officers, employees or agents of Renatoneil". There is no evidence inconsistent with this certification.
[39] Ms. Virgo argues, however, that there are genuine issues pertaining to the independence, quality and scope of Ms. Whitely's advice, which require a trial.
[40] I am satisfied, based on the evidence before me, that there is no basis to question the independence of the legal advice provided. The facts in this case are readily distinguishable from those in Carevest, supra, where the lawyer who advised the guarantor had also acted for the borrowers and provided them with corporate financing opinions. In the Carevest case, the guarantor and the lawyer gave conflicting evidence on a motion for summary judgement about the legal advice provided, which the Court found gave rise to a genuine issue for trial. In this case, in contrast, there is no evidence of any potential conflict of interest on the part of Ms. Whitely. There is no evidence that she was acting on behalf of Mr. Virgo, Renatoneil or the Bank. Indeed, she certified that she was not acting on their behalf when she executed the ILA Certificate. She also certified that she gave Ms. Virgo advice "as her solicitor and in her interest only and without regard to or consideration for the interest of Renatoneil Consultants Ltd., the Bank or any other person." Moreover, Ms. Virgo signed an acknowledgment that Ms. Whitely was consulted as her personal solicitor and in her interest only. The mere fact that Mr. Virgo made the arrangements for Ms. Virgo to meet with Ms. Whitely while she was in Jamaica is not sufficient to support an inference that the advice provided may not have been given independently.
[41] Ms. Virgo also raises concerns about the quality and scope of the legal advice provided by Ms. Whitely. She argues that the Bank failed in its obligation to take reasonable steps to ensure that the Guarantee she executed was properly explained and fully understood by her.
[42] In his factum, Mr. Bodkin (Ms. Virgo's counsel) submits that the "meaning, legal significance, operation and consequences" of the Guarantee "were not specifically addressed in Whitely's approximately 15 minute meeting with Ms. Virgo." He further submits that Ms. Whitely "made no mention of the profound legal impact of the Guarantee, nor the significance of its consequences, and she did not indicate that it would be in Ms. Virgo's best interest to seek modification of the Guarantee." These submissions are not supported by the evidence in the record.
[43] Ms. Virgo deposed that, during their meeting of approximately fifteen to twenty minutes, Ms. Whitely "briefly reviewed the document" with her and witnessed her signature. She did not specify what was or was not discussed during the document review. There is no evidence that Ms. Whitely failed to mention or explain the legal implications of the Guarantee, nor evidence that Ms. Whitely failed to advise Ms. Virgo that it would be in her best interest to seek modification of the Guarantee. The documentary evidence in the record suggests the contrary. As noted above, a portion of the first paragraph of the Guarantee was struck out, thereby limiting the scope of Ms. Virgo's liability. This modification of the Bank's standard form suggests that Ms. Whitely recommended beneficial revisions to the terms of the Guarantee.
[44] Moreover, Ms. Whitely certified that she explained the nature of the Guarantee, advised Ms. Virgo fully as to the liability she would incur by executing it, and also advised her fully as to the manner in which the liability could be enforced by the Bank. There is no evidence in the record that contradicts these written statements.
[45] The mere fact that their meeting was brief does not establish that the legal advice provided by Ms. Whitely was incomplete or otherwise deficient, nor does it establish that Ms. Virgo had inadequate time to obtain clarification of the obligations she was undertaking by signing the Guarantee.
[46] There is no evidence to support Ms. Virgo's submission that the Bank ought to have questioned the independence, quality or sufficiency of the legal advice provided. Mr. Bodkin argues that the Bank knew or ought to have known that Ms. Whitely, who was licensed to practice law in Jamaica, was not qualified to provide Ms. Virgo with legal advice regarding the Guarantee, which is governed by the laws of Ontario. While this argument might have merit in a different proceeding involving other issues, it has no bearing on the central issue before me, namely whether it was reasonable for the Bank to assume that Ms. Whitely adequately explained to Ms. Virgo the nature and scope of the liabilities created by the Guarantee and the mechanisms by which they could be enforced.
[47] Mr. Bodkin did not cite any authority for the proposition that a creditor cannot rely on independent legal advice provided to a guarantor by a lawyer outside of Ontario, when the guarantee that is the subject of the advice is governed by the laws of Ontario.
[48] There is no evidence that Ms. Whitely, an attorney in Jamaica, was incapable of explaining the implications of the Guarantee. There is no reason why the Bank ought to have questioned Ms. Whitely’s certification that she had done so.
[49] Ms. Virgo argues that deficiencies in Ms. Whitely's legal advice should be deduced from the fact that the liabilities arising from the Guarantee were not included in her net family property equalization calculation during her divorce proceedings. This evidence supports a finding that Ms. Virgo was not aware of Renatoneil's outstanding indebtedness to the Bank or of the Bank's default judgement against her as guarantor of a portion of that debt. It does not, however, establish that she was necessarily ill informed about the exposure to liability created by the Guarantee. She could have fully understood her obligations and risk under the Guarantee, while at the same time being unaware that her liability had been triggered by Renatoneil's default and the Bank's subsequent demand for payment. This would explain her failure to include this liability in her net family property calculations without calling into question the advice she received when she signed the Guarantee.
[50] Finally, even if the Court were persuaded that the advice provided by Ms. Whitely was deficient for any of the reasons advanced by Ms. Virgo's counsel, that would not relieve Ms. Virgo of her contractual obligations under the Guarantee. Even a complete absence of independent legal advice will only vitiate an agreement when it is coupled with other facts establishing actual or presumed undue influence (or other defences such as misrepresentation, non est factum, or fraud, none of which were pleaded by Ms. Virgo in this case). See Bank of Montreal v. Featherstone (1989), 1989 4218 (ON CA), 68 O.R. (2d) 541 (C.A.).
[51] As noted above, there is no evidence of actual undue influence in this case and no evidence to support a presumption of undue influence based on the nature of Ms. Virgo's relationship with her husband at the time. At its highest, Ms. Virgo's evidence is that she attended a lawyer's office and signed the relevant documents at her husband's request because he told her that he had arranged bank financing for one of his businesses, that he required funds to take care of some long standing and urgent matters, and that her signature was required on a couple of documents because she was his spouse. This does not constitute evidence of undue influence. In the absence of such evidence, any deficiencies in the legal advice provided would not relieve Ms. Virgo of her liability under the Guarantee. See Bank of Montreal v. 1480863 Ontario Inc. et al. (2007), 13359 (ON SC) at paras.20-27.
CONCLUSION
[52] The evidence presented and arguments advanced on behalf of Ms. Virgo do not, in my view, give rise to any genuine issues requiring a trial with respect to the sufficiency or independence of the legal advice provided by Ms. Whitely, or the voluntariness of Ms. Virgo's consent to act as guarantor of Renatoneil's debt.
[53] I am satisfied that the summary judgement process allows me to reach a fair and just determination of the issues in dispute. The evidence before me is largely uncontested and permits me to make the necessary factual and legal findings to adjudicate the issues on their merits.
[54] For the reasons set out above, I conclude that the Bank is entitled to judgement against Ms. Virgo for $12,087.05, plus pre-judgement and post-judgement interest at the contractual rate stipulated in the Guarantee, namely the Bank's prime rate at the time of demand plus 2% per annum. However, the rate of interest and the commencement date for the accrual of pre-judgement interest will not be fixed at April 9, 2009, as requested by the Bank.
[55] The Bank is seeking interest from April 9, 2009 because that is the date when its lawyer wrote to Ms. Virgo to demand payment under the Guarantee she had provided for Renatoneil's indebtedness. The Bank does not dispute Ms. Virgo's evidence that its demand letter did not actually come to her attention at that time. The letter was sent to Renatoneil's corporate address, not to Ms. Virgo's address, and Ms. Virgo had separated from Mr. Virgo months earlier. According to the terms of the Guarantee, Ms. Virgo's liability bears interest from the date of the Bank's written demand for payment and such demand is "deemed to have been effectually made when an envelope containing such demand addressed to [Ms. Virgo] at the address of [Ms. Virgo] last known to the Bank is posted, postage prepaid." The Bank has not presented any evidence to show that Renatoneil's corporate address is the address for Ms. Virgo that was known to the Bank at the time. The evidence in the record is that Ms. Virgo has never had any involvement in Renatoneil's affairs.
[56] Under s.128 of the Courts of Justice Act, R.S.O. 1990, c.C43, the Bank is entitled to an award of interest calculated from the date its cause of action arose. The Bank has not established that Ms. Virgo's liability as guarantor arose on April 9, 2009 by virtue of an effectual written demand for payment pursuant to the terms of the Guarantee.
[57] The Bank's commencement of this action against Ms. Virgo in May 2009 did not constitute an effectual written demand for payment because the Bank did not personally serve her with its statement of claim. She was unaware of Renatoneil's default and unaware of the Bank's proceeding (and of the default judgement) against her until the Bank's Writ of Execution was discovered by her lawyer in late May 2014. In these circumstances, it would be unjust to require Ms. Virgo to pay pre-judgment interest on the amount owing for any period prior to June 1, 2014.
[58] Pursuant to s.130 of the Courts of Justice Act, I award the Bank pre-judgement interest on Ms. Virgo's outstanding liability ($12,087.05) calculated from June 1, 2014, based on the Bank's prime rate of interest on June 1, 2014 plus 2% per annum (per the terms stipulated in the Guarantee). Any post-judgement interest will be calculated at the same rate.
COSTS
[59] The Bank has achieved substantial but not complete success in this motion (it did not succeed with its claim for pre-judgement interest dating back to April 2009). The Bank is entitled to its costs on a partial indemnity basis. After considering the submissions of counsel with respect to costs and the factors listed in s. 57.01(1) of the Courts of Justice Act, I order Ms. Virgo to pay the Bank's costs in the amount of $3,500, inclusive of HST and disbursements.
Petersen J.
Date: September 14, 2017
CITATION: The Bank of Nova Scotia v. Renatoneil Consultants Ltd., 2017 ONSC 5473
COURT FILE NO.: CV-09-21-76-SR
DATE: 20170914
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: The Bank of Nova Scotia, Plaintiff
AND:
Renatoneil Consultants Ltd., operating as Wave Zone, Lois Virgo and Jeremy Virgo also known as Jeremy Renato Virgo, Defendants
BEFORE: PETERSEN J.
COUNSEL: Alexandra Tratnik, Counsel, for the Plaintiff
Donald Bodkin, Counsel, for the Defendants
REASONS FOR JUDGMENT
Petersen J.
Date: September 14, 2017