CITATION: McPherson v. Napior, 2017 ONSC 5934
COURT FILE NO.: 15-65148
DATE: 2017/10/10
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: LONNY McPHERSON – Plaintiff v. KAREN ANN NAPIOR and CHRISTOPHER JOHN NAPIOR - Defendants
BEFORE: Mr. Justice Charles T. Hackland
COUNSEL: J. Alden Christian, for Plaintiff, Lonny McPherson
Robert E. Houston, Q.C. for the Defendant, Karen Ann Napior
Jonathan P.M. Collings, for the Defendant, Christopher John Napior
HEARD: September 19, 2017
ENDORSEMENT
[1] The plaintiff moves for summary judgment against the defendants on a liquidated debt. The plaintiff was a personal friend of the defendants Mr. and Mrs. Napior and he lent them various sums of money, which are agreed to total $340,000 in terms of principal. The defendants gave the plaintiff a second mortgage on their home in Manotick to secure the debt.
[2] The mortgage has been amended and renewed from time to time. However, the mortgage is due and notwithstanding written demands for payment and a great deal of patience on the plaintiff’s part no amount has been paid on the debt.
[3] Counsel for the plaintiff began his submissions by acknowledging that there was an ambiguity or conflict in the loan documentation as to whether the annual interest on the funds advanced was to be 15% compounded annually or 15% compounded bi-annually. He advised his client, in the interest of obtaining judgement, was waiving any claim for bi-annual compounding of interest. The debt of the mortgage therefore bears interest at the rate of 15% per annum.
[4] All of the funds in question were advanced to the defendants Mr. and Mrs. Napior. It appears that a substantial portion of the funds were used to support a condominium project that Mr. Napior was developing in the Huntsville area. This project has not been successful to date and this has put the Napior’s under financial stress.
[5] The defendants submit that a trial is necessary to determine what interest rate is applicable and whether relief is required due to the transaction being unconscionable and, regarding Mrs. Napior, that she did not receive independent legal advice in respect of the promissory notes or the mortgage.
[6] I am of the opinion that all the relevant evidence is before the court and there is no need for a trial. The interest calculation issue is resolved as noted previously. Moreover there is no merit in the argument that these loan arrangements constituted an unconscionable transaction.
[7] It has also been submitted that there was no consideration flowing to the defendants, or at least to Mrs. Napior in these transactions. However the evidence establishes that the funds were disbursed to the defendants and hence there can be no question of lack of consideration. Neither defendant has suggested that they misunderstood the nature or effect of any of the documentation they signed.
[8] The evidence also establishes that Mr. Napior sought out the plaintiff and asked for this series of loans. The plaintiff who is not a commercial lender, but as noted was a friend, agreed to advance the funds. For each of the loans, the defendants were represented by solicitors who drew the documentation and registered the mortgage. The plaintiff was not represented by a solicitor.
[9] Under the Unconscionable Transactions Relief Act, R.S.O. 1990, c. U. (“the Act”), where the court finds in respect of money lent that the cost of the loan is excessive and that the transaction is harsh and unconscionable, the court may order various forms of relief. In Ekstein v. Jones, (2005), 34 R.P.R. (4th) 280 (Ont. S.C.), at paras. 48-60, citing Murray v. TDL Group Ltd., [2002] O.T.C. 1024 (S.C.) the court clarified what is required to meet the requirements under s. 2 of the Act:
- To establish that the loan is excessive:
(i) The debtor must show that the cost constitutes a criminal rate of interest; or
(ii) The debtor must show that the cost of the loan is excessive having regard to the risk and all of the circumstances.
- To establish that the transaction is harsh and unconscionable:
(i) The debtor must show that either the terms are very unfair or that the consideration is grossly inadequate; or,
(ii) The debtor must show that there was an inequality of bargaining power between the parties and that one of the parties took advantage of this.
[10] The defendants have put no evidence before the court to support the claim that the loans in question were unconscionable. There is no evidence that the defendants could have borrowed from commercial lenders at a lower rate, or at all. Indeed it is apparent from all the circumstances that these were high risk loans and no payouts have ever been made on account. The evidence satisfies me that the plaintiff did not take advantage of the defendants in any way.
[11] With respect to Mrs. Napior not receiving independent legal advice, it was she and not the lender who had legal representation and in any event she did not misunderstand the nature and effect of the loan documentation.
[12] It was apparently the hope or expectation of the defendants that they would be able to repay the loans in question from the proceeds of the Huntsville development or could refinance the loans using the Huntsville property. Regrettably that did not turn out to be possible. However the plaintiff was not part of that development and the Huntsville development is not mentioned in any of the loan documentation. The parole evidence rule precludes reading into the loan documentation the borrowers expectations about this project, see Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, para. 59.
[13] In conclusion, the plaintiff is awarded summary judgment on the debts herein fixed in the sum of $340,000 plus annual interest in the sum of 15% calculated from the date of the respective advances to the date of judgment. Counsel are to calculate the interest owing and I will settle the judgment in the event of disagreement.
[14] The plaintiff may submit his submissions on costs within 14 days of the release of this endorsement and the defendants may respond within 14 days of receiving the plaintiff’s submissions.
Mr. Justice Charles T. Hackland
Date: October 10, 2017
CITATION: McPherson v. Napior, 2017 ONSC 5934
COURT FILE NO.: 15-65148
DATE: 2017/10/10
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: LONNY McPHERSON – Plaintiff
AND
KAREN ANN NAPIOR and CHRISTOPHER JOHN NAPIOR - Defendants
BEFORE: The Honourable Mr. Justice Charles T. Hackland
COUNSEL: J. Alden Christian, for Plaintiff, Lonny McPherson
Robert E. Houston, Q.C. for the Defendant, Karen Ann Napior
Jonathan P.M. Collings, for the Defendant, Christopher John Napior
ENDORSEMENT
Released: October 10, 2017