CITATION: Fitzgerald v. Fitzgerald, 2017 ONSC 6209
COURT FILE NO.: C-4664-16
DATE: 2017-10-26
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Kimberley Ann Fitzgerald
Plaintiff
– and –
Kevin James Fitzgerald and Kelly Lynn Fitzgerald (nee Trainor) and 1232342 Ontario Inc., o/a Aurora Research Inc., and 979072 Ontario Inc. o/a Aurora Microsystems Inc.
Defendants
Dhiren R. Chohan, for the Plaintiff
George Florentis, for the Defendants
HEARD: October 13, 2017
REASONS FOR JUDGMENT
GAUTHIER, J.
Overview
[1] The plaintiff, Kimberley Ann Fitzgerald (“Kimberley”) seeks summary judgment against the defendants in the amount of $155,322.82. In the alternative, she seeks an order that the defendant Kevin Fitzgerald (“Kevin”) is personally liable for the corporate defendants’ debt.
[2] The defendants delivered a statement of defence and counterclaim to Kimberley’s statement of claim. However, at the hearing of the summary judgment motion, the parties agreed that the counterclaim would be dismissed without costs. I endorsed the record accordingly. As well, the plaintiff advised that she would not be pursuing her claim for lost investment opportunities, set out at paragraph 21 of the amended statement of claim.
[3] The proceedings involve a dispute over a line of credit opened by Kimberley. One of the issues in dispute is whether this was done for the benefit of all or just one of defendants. The defendants have allegedly violated the initial unwritten agreement by failing to make principal and interest payments to repay the loan within one year.
Background
Facts giving rise to the dispute
[4] Kevin owned and operated two businesses, the defendants 123242 Ontario Inc., o/a Aurora Research Inc. (“Aurora Research”) and 979072 Ontario Inc., o/a Aurora Microsystems Inc. (“Aurora Microsystems”). From 2007 until at least 2015, Kevin was the president and director of both corporations, while the defendant Kelly Fitzgerald (“Kelly”), Kevin’s wife, occupied administrative positions within the two corporations.
[5] In or around January 2007, Kimberley, who is the sister of Kevin, agreed to open a line of credit in her name for the sole purpose of providing a loan in the amount of $125,000. The first issue that needs to be addressed is whether the loan was to either or both of Kevin and Kelly, to one of the corporate defendants, or to all of the defendants.
[6] Kevin’s original instructions to Kimberley on how to conduct the transfer of funds were outlined in an email dated January 18, 2007. A cheque needed to be made out to Kimberley that would then be deposited into Kimberley’s bank account, and then a draft would be payable to Kevin and Kelly.
[7] An emailed dated January 30, 2007 reiterated and amplified the instructions that a draft or certified cheque would have to be deposited into Kimberley’s account, then Kimberley was to withdraw it by way of bank draft or certified cheque made out to Kelly and Kevin. That cheque would then be deposited into what Kevin described as “our” account. It is unclear which account that was, a personal or a corporate account, because no bank records have been provided by the defendants.
[8] Those instructions were then altered by way of email from Kevin to Kimberley on February 8, 2007, at which time Kevin instructed Kimberley to obtain a certified cheque payable to Kelly.
[9] On February 15, 2007, Kimberley delivered a bank draft in the amount of $124,000, payable to Kelly Fitzgerald.
[10] There was no formal written agreement between the parties. However, according to the plaintiff (and this is corroborated by documentary evidence), Kevin was to get a formal agreement drawn up by a lawyer. That was never done.
[11] Kimberley states that there was an agreement that the loan would be repaid in one year and that monthly payments would be in the amount of $2,400. The defendants deny that either an interest rate or a term for repayment was agreed upon. According to the defendants, Aurora Microsystems agreed to make monthly payments of $2,400 (blended principal and interest) on the condition that the corporation was solvent and could afford it. The intention was to repay the loan in 10 to 15 years, which they claim is why Aurora Microsystems paid for a 10-year life insurance policy on the lives of Kevin and Kelly payable, in part, to Kimberley in the amount of $125,000.
[12] On March 5, 2007, Aurora Microsystems paid the sum of $4,800 to Kimberley’s line of credit. Between April 2007 and April 2008, monthly payments of $2,400 were made by Aurora Microsystems. As of May 15, 2008, the outstanding balance on the line of credit was $96,384.21.
[13] On May 22, 2008, Kevin advised Kimberley by way of email that he could not “pay the loan back in full today.” On that same day, Kevin emailed Kimberley the following:
I Kevin Fitzgerald, Issue a Promissary [sic] note, for the amount of $98,500.00 Canadian Dollars.
This note is effective as of Feb 1st, 2007.
This is a personal Promissary [sic] Note.
Not a business note.
[14] The payments stopped as of September 20, 2008.
[15] On February 18, 2009, Kimberley made a payment in the amount of $203.34 to cover the interest accruing on the line of credit.
[16] On February 27, 2009, Kevin sent Kimberley an Interact email money transfer in the amount of $203.34, presumably to cover the interest on the line of credit that had been covered by Kimberley.
[17] On February 27, 2009, Kevin asked Kimberley for a further $7,000. On March 3, 2009, Kimberley issued a certified cheque to Aurora Microsystems in the amount of $7,000 from her personal account. Kimberley advised Kevin and Kelly by way of email March 3, 2009, that:
The $10k was transferred from Solutions bank to the TD when I checked tonight, so another $3k is available if you need it.
[18] Kevin replied the next morning that “We will need to access it.” Kimberley provided a cheque for the $3,000 from her personal account. The record does not disclose to whom the cheque was made payable.
[19] On March 27, 2009, according to Kimberley, Kevin requested an additional $33,100. Kimberley transferred that amount from the line of credit to her personal TD Bank account and provided a bank draft in that amount payable to Kevin Fitzgerald. The balance due to Kimberley as of April 15, 2009 was $120,693.73.
[20] In December 2009 and December 2010, Kimberley received cash payments of $1,000 and $2,000, respectively, which were left at the home of Kevin and Kimberley’s parents. Those monies were applied to the interest accruing on the line of credit.
[21] No payments were made by any the defendants until June 2014. Between June 2014 and June 2015, monthly payments of $325 were made totalling $3,900. Those payments were made by Aurora Microsystems. The last payment was made in June 2015. Nothing has been paid since, save and except for a payment of $7,475 on March 9, 2017.
[22] Kimberley made payments to cover the interest on the line of credit from March 2009 to May 2014, and from June 2015 to date. As of February 2016, Kimberley has expended a total of $34,583.63 to cover principal, interest, and bank fees on the line of credit. This is in addition to the amount outstanding on the line of credit, thus the claim for $155,322.82.
Issues
[23]
(a) Is Kimberley entitled to summary judgment against all defendants?
(b) In the alternative, is Kimberley entitled to summary judgment against the corporate defendants only?
(c) If the answer to (b) is yes, then can the corporate veil be pierced to hold Kevin liable for Kimberley’s damages?
Courts’ Jurisdiction
[24] Rules of Civil Procedure, R.R.O. 1990, Reg. 194:
20.04(1) Disposition of Motion
General
20.04(1) [Repealed O. Reg. 438/08, s.13(1).]
20.04(2) The court shall grant summary judgment if,
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or
(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.
Powers
20.04(2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
Positions of the Parties
Plaintiff
[25] 1. Is the plaintiff entitled to summary judgment against all defendants?
(a) Rule 20.04(2)(a) allows for summary judgment where “there is no genuine issue requiring a trial with respect to a claim or defence,” and summary judgment is in the interest of justice. In Hyrniak v. Maudlin, 2014 SCC 7, [2014] 1 S.C.R. 87, at paras. 48, the Supreme Court of Canada upheld the Ontario Court of Appeal’s guideline that “summary judgment would most often be appropriate when cases were document driven, with few witnesses and limited contentious factual issues, or when the record could be supplemented by oral evidence on discrete points.” Motion judges must weigh the proportional benefits of summary judgment over a trial, including costs, time, and evidence available. Summary judgment is encouraged where judges’ enhanced fact-finding powers allow for more expeditious resolution of matters, unless the interest of justice is not served by granting summary judgment. The court stated: “On a summary judgment motion, the evidence need not be equivalent to that at trial, but must be such that the judge is confident that she can fairly resolve the dispute” (at para. 57).
(b) There is no genuine issue requiring trial. The present case is document driven, requires few witnesses, and the evidence on the motion record would be very similar to that tendered at trial. A trial is therefore not needed to decide this matter fairly and justly.
(c) Regarding the interest of justice, proportionality, timeliness, and affordability all favour summary judgment.
(d) The defendants accepted the money and agreed to repay it in one year, and this was not done. Three amounts were given to the defendants: $124,000 in February 2007, $10,000 in February 2009, and $33,100 in March 2009. The businesses’ head offices were also the family home, and some of the loan money appears to have been spent on the home. This shows the money was used for both business and personal measures.
(e) The plaintiff seeks judgment in the amount of $155,322.82, including liquidated damages on the loan amount of $120,739.19 and pecuniary damages of $34,583.63 (the cost to the plaintiff to keep the loan in good standing). Alternatively, the same amount is sought against the corporate defendants.
In the alternative, is the plaintiff entitled to summary judgment against the corporate defendants only?
If the plaintiff is entitled to summary judgment against the corporate defendants, and not the defendants Kevin and Kelly, can the corporate veil be pierced to hold the personal defendants liable for the plaintiff’s damages?
(a) 642947 Ontario Ltd. v. Fleischer (2001), 56 OR (3d) 417, 2001 823, (C.A.), at paras. 67-68 outlines that “the separate entities” principle is not enforced when it would yield a result “too flagrantly opposed to justice, convenience or the interests of the Revenue,” and the veil “can also be pierced if when incorporated ‘those in control expressly direct a wrongful thing to be done.’”
(b) The veil ought to be pierced as the plaintiff dealt with the defendants in their personal capacities. If the money was intended to be a business loan, then the defendants misappropriated the money and used it in a personal capacity. No evidence was provided for how the money was used, but a reasonable inference is for mortgage payments and camp renovations based on the emails. The responding motion record of the defendants features Facebook posts that suggest the defendants also used the money on vacations. An email reference the loan preventing the defendants going “hand to mouth,” suggesting personal and commercial financial difficulties. There was no evidence that the money went to the corporate defendants’ bank accounts, and the implication is that the money was misappropriated.
(c) It would be flagrantly unjust to not pierce the veil. The defendants submitted that they had no money for counsel, and there appears to be no chance of recovery as the corporate defendants are also defunct. The defendant Kevin benefited commercially and personally from the loan, and the intermingling makes it impossible to trace the funds as the defendants have provided no bank records. Kevin was unjustly enriched by the loans, and he ought to be personally liable for the judgment against the corporate defendants.
(d) It would be unjust and inequitable to allow the defendants, and especially Kevin, to have had the benefit of Kimberley’s money over all these years and not have a judgment against him for what he has failed to repay, to the very real detriment of Kimberley.
Defendants
[26] 1. Is the plaintiff entitled to summary judgment against all defendants?
(a) There are three kinds of cases for which summary judgment is appropriate: where the parties consent, where the claim/defences are meritless, and where there are no genuine issues requiring a trial. Neither applies here. The criteria in rule 20.04(2) are not met as the defendants do not agree to have all or part of the claim heard by summary judgment and there are multiple issues that cannot be resolved through affidavit evidence (necessitating a trial).
(b) The defences have merit, and for the plaintiff to succeed the defences would have to have no chance of success. The amended statement of defence raised the defences of limitations, improper defendants named, no breach of contract, and waiver of right to cause of action.
(c) Furthermore, there are several triable issues:
i. The purpose for which the loans were made (i.e. for commercial or personal/commercial use);
ii. Delay in bringing the claim (the plaintiff waited until the second year after the alleged default, and she acknowledged being aware of not receiving the monthly payments from March 2009 to May 2014);
iii. Which of the three loans each payment was being directed towards from June 2014 to June 2015 and fall 2016 to May 2017;
iv. The proper defendants (given inconsistent statements in the affidavits of the purpose of the loans and failure to plead a cause of action against Aurora Research); and
v. No breach of contract based on the lack of repayment schedule and repayment being contingent on the business’ success.
(d) Even if there is no genuine issue requiring a trial, summary judgment is not in the interest of justice as the court does not have a full appreciation of the evidence. Summary judgment is not for cases involving multiple findings of fact on conflicting evidence, many witnesses, and voluminous records: Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, 108 O.R. (3d) 1, at para. 51. Full appreciation requires more than motion judges assessing if they are capable of reading and interpreting all evidence put before them: ibid, at para. 53.
(e) It is not in the interest of justice to use summary judgment powers where issues are complex and demand the normal process of production and discovery before a party can respond. Making a responding party build a record through affidavits and cross-examination replicates and anticipates what should happen more efficiently in the usual discovery process. A party faced with premature of inappropriate summary judgment should be able to stay or dismiss the motion if normal discovery is the most efficient means of developing a record to satisfy the full appreciation test, rr. 1.04(1), (1.1), (2), and 1.05.3: ibid, at paras. 57-58.
(f) The court cannot fully appreciate the evidence at this time as there are questions of fact and law requiring cross-examination, oral examination for discovery, credibility evaluations, and drawing of reasonable inferences. There are also issues of law requiring a trial to fully formulate arguments, represent facts, and answer questions of law. This is not a document-driven case—there is no contract for any of the three loans and the parties will rely upon oral evidence that is ten years old, and the motion record does not allow a full appreciation of the evidence.
(g) The terms of the three loans are disputed between the parties including, but not limited to, the interest rate, the length of term and/or the repayment terms. There is even an issue of whether one or all of the defendants are actually in default on the loans.
(h) The plaintiff has failed to plead any cause of action against Aurora Research in her statement of claim, therefore there is no basis upon which summary judgment can be granted against that defendant.
(i) Although not raised in the defendants’ factum, their position is that the statement of claim discloses no cause of action against any of the defendants. The statement of claim makes no claim for damages for breach of contract or breach of a promissory note, nor does it make any claim for equitable relief. The alleged breach of the one year term for repayment is not pleaded. In those circumstances, summary judgment is not available to the plaintiff.
(j) Even if it was available, the plaintiff has not sustained any damages. The line of credit is not in default nor has the lending institution made a demand for payment on the line of credit. Moreover, the arrangement made between the parties was never intended by them to be subject to enforcement by court order.
(k) Finally, the defendants suggest that the email of May 22, 2008, being the promissory note, has been altered in that the font for the portion of the email that refers to the note being personal and not a business note, is in a font different from the balance of the email.
The Evidence and Findings of Fact
[27] Firstly, the evidence establishes that three loans were made to one or more of the defendants from Kimberley:
(i) $125,000 (February 15, 2007);
(ii) $10,000 (February 27, 2009); and
(iii) $33,100 (March 2009).
[28] Kevin, either in his personal capacity or as the representative of Aurora Microsystems, acknowledges as much in his supplementary affidavit sworn October 6, 2017. In addition, in his earlier affidavit sworn March 1, 2017, Kevin, in both his personal capacity and as representative of Aurora Microsystems and Aurora Research, acknowledges that the total debt was accrued over time. See paragraph 3 of the affidavit, where he says:
This Action arises out of a debt incurred by the Corporate Defendant, 979072 Ontario Inc. o/a Aurora Microsystems Inc. from 2007.
[29] At paragraph 16 of the same affidavit, Kevin acknowledges the debt of both corporations:
The plaintiff’s lawyer is attempting to seek relief from Kevin James Fitzgerald and Kelly Lynn Fitzgerald for the corporate debt of 1232342 Ontario Inc. and 979072 Ontario Inc.
[30] Kevin acknowledged owing $98,500.00 by way of the promissory note of May 22, 2008. Although there is a suggestion that the email reflecting the promissory note has been altered, there is no outright denial that the promissory note was an acknowledgement of the personal debt. Even if one were to ignore the last two lines of the email, there is no indication that the debt is that of Aurora Microsystems Inc.
[31] In an email from Kevin to Kimberley dated July 29, 2008, referring to the facts that “are pretty straightforward,” Kevin says: “I owe money to the Family….”
[32] There is evidence that in early 2007, around the time of arranging the line of credit and the first loan, Kevin was expressing to Kimberley concern about his ability to keep afloat, including meeting his and Kelly’s mortgage payments.
If we can get 5-10k that would tide us over to next week, otherwise we are going to be bouncing stuff in the next day or two – mortgage, etc….
[33] Kevin and Kelly reside at 24 Finland Street in Copper Cliff in Sudbury, Ontario. Title to that property is held by Kelly as sole owner. Kevin and Kelly are the joint registered owners of property on Manitoulin Island. Both the Finland Street property and the Manitoulin property are encumbered by one mortgage. There is no evidence of any mortgage being held by either of the corporations. Thus, the mortgage referred to in the email of February 13, 2007, from Kevin to Kimberley, can only be to the mortgage just referred to. Any payment on that mortgage would be for the benefit of Kevin and Kelly personally, not either of the corporations.
[34] There is evidence that Kevin and Kelly did attempt to sell some personal assets to generate funds when they were having financial difficulties. I refer to an email from Kevin to Kimberley, dated September 7, 2007, wherein Kevin wrote: “We have finally received a serious inquiry on the boat / trailer –39k.”
[35] Kevin arranged for life insurance to cover the value of the original loan. A copy of the London Life insurance policy details indicates, among other things, that effective June 13, 2007, Kimberley Anne Fitzgerald is a beneficiary in the amount of $125,000 on the lives of Mr. Kevin Fitzgerald and Mrs. Kelly Fitzgerald.
[36] Kelly maintains that she at no time was a director, shareholder, or other governing party to the two corporations, and that she never undertook or agreed to be responsible for any of the loans. However, she permitted Kimberley to be added to her personal life insurance policy as a beneficiary, initially in the amount of the original loan and eventually in the amount outstanding in 2009.
[37] The London Life insurance policy was updated to reflect the balance owing on the loan in 2009, and an email from Kelly to Kimberley dated March 2, 2009 confirms the same.
[38] The initial advance of funds was made to Kelly by way of bank draft dated February 15, 2007, pursuant to Kevin’s email instructions to Kimberley on February 8, 2007.
[39] Kelly’s affidavit says this about the initial payment to her:
I accepted the initial cheque of $125,000.00, on behalf of Aurora Microsystems. The monies were utilized by Aurora Microsystems. The monies were subsequently deposited on behalf of Aurora Microsystems for the use of benefit or [sic] Aurora Microsystems into the Aurora bank account.
[40] There is no documentary evidence to corroborate this statement nor to show how much, if any, of the $124,000 was in fact deposited in the Aurora Microsystems bank account, nor to show what the monies were used for.
[41] There is evidence by way of a copy of a bank draft, as well as a copy of the G/L Account from Aurora Microsystems, establishing that the initial repayment of $4,800 was made by Aurora Microsystems and that the monthly payments of $2,400 made up until to January 31, 2008 were also made by that corporation, not Kevin or Kelly personally. These payments were for both principal and interest, as confirmed by a personal email from Kelly to Kevin and Kimberley on March 11, 2007.
[42] The documentary evidence establishes that Aurora Microsystems made payments to Kimberley in the amount of $28,800. The affidavit evidence of Kevin that Aurora Microsystems company records “indicate that a total of approximately $57,778.34 in payments were made by Aurora Microsystems to the Plaintiff” is not corroborated by any documentary evidence.
[43] The evidence to support Kimberley’s position that the term of the original loan was one year consists of the following:
(a) Email from Kimberley to Kevin on September 12, 2007: “…Just wanting to touch base on the projections for the 1 year time frame (you said you had expected to be making balloon payments) and how this is looking.”
(b) Email from Kimberley to Kevin on November 21, 2007:
It sounds like you are getting some good accounts… Believe me I know how busy you are but Mom, Dad and I would appreciate if you would make the time to give us an update in person to give us the big picture. With the 1-year timeline that we agreed to fast approaching we’d like to know how it’s going.
(c) Emails from Kevin, on May 22, 2008, indicating the following:
At 11:37 a.m.: “Today I don’t have anywhere near 100k, however…”
At 10:41 p.m.: “I cannot pay the loan back in full today. Please get me a balance that is outstanding…”
At 11:27 p.m.: “I Kevin Fitzgerald, Issue a Promissary [sic] note, for the amount of $98,500.00 Canadian Dollars.
This note is effective as of Feb 1st, 2007.
This is personal Promissary [sic] Note.
Not a business note.
[44] There is one piece of evidence which could be seen as contradicting the evidence of a one year term, and that is the email from Kimberley to Kelly dated February 21, 2007, in which Kimberley says: “Period: There is no fixed period – Kevin stated that he would be able to make payments of $2,400.00… He said he would be paying back with lump sum payments as well when you guys receive payments you are expecting.”
[45] That said, there is no evidence of any disagreement about the one year term being confirmed, more than once, by Kimberley to Kevin.
[46] There is documentary evidence to establish the interest rate applicable to the loan. For example, the emails to and from Kimberley and Kelly February 20 and 21, 2007, which refer to the interest rate being at “Prime – currently 6%.”
[47] Other than Kevin’s statement under oath that the term of the loan was 10 to 15 years and conditional on the solvency of Aurora Microsystems, there is no documentary or other corroborating evidence of this alleged fact.
[48] The following evidence establishes the parties’ intention to have their oral agreement reduced to writing:
(a) Email from Kimberley to Kevin on September 12, 2007, where she says: “We were also wondering about the paperwork that you said you would get to us as previously discussed.”
(b) Email from Kevin to Kimberley on September 12, 2007: “I’ll contact lawyers again to see what’s happened on paperwork. I honestly let that slide. Sorry.”
(c) Email from Kevin to Kimberley on September 13, 2007, to the effect that, “contacted lawyer, he is still sick….”
(d) Email from Kimberley to Kevin on November 21, 2007, in which Kimberley says, “We still are waiting for the paperwork and other stuff that you agreed to when we made the loans.”
[49] The following evidence establishes that Aurora Research was intended as one of the beneficiaries of the funds advanced between 2007 and 2008:
(a) Document provided to Kimberley from Kevin, setting out “claims” that were due to Aurora Research.
(b) Email from Kevin to Kimberley September 7, 2007, with update on accounts receivable for both Aurora Microsystems and Aurora Research.
(c) Email from Kevin to Kimberley on November 21, 2007, stating that “We have lots of “SRnED” in the pipe.”
(d) Email from Kevin to Kelly on February 27, 2009: “We are doing another 1.2 million in “SRnED” submissions today and received our technical review finally for aurora.”
(e) Accounts receivable summary for Aurora Research, generated on March 2, 2009, showing total receivables of more than $1.2 million dollars.
[50] Evidence by way of bank draft and email establishes that the second advance of $10,000 was made to Aurora Microsystems.
[51] The evidence establishes that communications from the defendants to Kimberley were mainly by email from the email accounts of Kevin and Kelly in their role as employees or directors of Aurora Microsystems, however, some were from their personal email accounts as well.
[52] Other evidence to support the position that Kevin and Kelly were personally responsible for the loan and looked to benefit personally from the funds consists of the September 7, 2007 communication from Kevin to Kimberley, which is primarily a “state of the union” of the corporations and the Fitzgeralds’ personal financial situation. The document refers to an increase in the property value for the Manitoulin Island property, an increase in the property value for the Finland Street residence, and a reduction in personal expenses (such as day care, home phone, etc.).
[53] Also, I refer to the document entitled “Opportunities_2007”, where personal expenses such as day care and home internet are set out. This document was provided to Kimberley in the context of the loans that form the basis of the action.
[54] The above evidence permits me to make the following findings of fact:
(a) The original and subsequent loans were made for the benefit of all the defendants, including the personal defendants.
(b) The term for the original loan was one year.
(c) The interest rate was the prime rate, which was 6% as at February, 2007.
(d) The amortization period was five years, with lump sum payments to be made from time to time.
(e) The parties intended for the agreement to be reduced to writing, but Kevin neglected to do so.
(f) Although there were defaults in payment, some sporadic payments were made by Aurora Microsystems and by cash payment, including a lump sum payment in the amount of $7,475 on March 9, 2017, representing interest payments from July 2015 up to and including May 2017.
(g) The March 9, 2017 payment, made by way of bank draft, does not support the position that the payment was made by Aurora Microsystems. The document does not show who the payor is.
(h) Both Kevin and Aurora Microsystems made payments toward the loan over the years.
(i) All of the defendants benefited from the sums advanced over the years by way of Kimberley’s line of credit.
(j) The sum of $155,322.82 is owed to Kimberley by all defendants, including the personal defendant Kevin.
Analysis and Conclusions
[55] There is no genuine issue requiring a trial. The case is document-driven and requires few witnesses. The evidence on the motion is very similar to what would be tendered at trial, and the evidence on the motion is sufficient for me to fairly resolve the dispute. Therefore, a trial is not required.
[56] The provisions of rule 20.02(2) are engaged in this case:
In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial.
[57] The defendants Kevin and Kelly have made certain self-serving assertions in their affidavits in an attempt to distance themselves personally from the debt, but they have failed to provide any evidence to support those assertions. No bank records were provided. No complete business records to reflect events up to March 2017 have been put in evidence. The defendants have failed to put their best foot forward. Assertions without supporting evidence do not create a triable issue.
[58] Given my conclusion about the personal liability of Kevin and Kelly, I need not address the issue of piercing the corporate veil.
[59] I do wish to address certain defences raised by the defendants.
[60] Dealing firstly with the Limitations Act, 2002. S.O. 2002, c. 24, Sch. B. defence, I have already concluded that the defence is unavailable given the acknowledgements of the debt over the years and ultimately by way of the March 9, 2017 payment.
[61] The insufficiency of the pleadings defence also fails.
[62] Pleadings do not need to explicitly state the legal doctrines being relied upon, however, it needs to be clear what legal claims are being relied upon based on a plain reading of the statement of claim.
[63] Rule 25.06 of the Rules of Civil Procedure lists some general requirements for pleadings, but the only stringent requirement in a case like this is that the material facts be pleaded.
[64] There is no uniform standard for what is required to determine that an issue has been pleaded, and the level of specificity required will instead depend on the context. Judges typically give a “plain reading” of the statement of claim to see if a particular claim has been advanced: see e.g. Lombardo v. Caiazzo, 2006 19325 (C.A.).
[65] Facts pleaded must correspond to the elements of the cause of action being relied upon: Immocreek Corp. v. Pretiosa Enterprises Ltd., 2000 14728 (Ont. C.A.).
[66] It is surprise and the resulting prejudice that must be avoided: see 2811472 Canada Inc. v. Royal Bank of Canada (2006), 2006 23253 (ON SC), 81 O.R. (3d) 721 (S.C.). The overriding concern is unfairness. The jurisprudence suggests that summary judgment can be used to adjudicate on issues that have not been pleaded as long as the relevant facts are set out and no unfairness would be caused. If the other party would be caught by surprise and would not be able to adequately respond, then summary judgment would be inappropriate.
[67] The amended statement of claim does not explicitly state that the plaintiff is basing her claim on breach of contract or breach of promissory note. However, the material facts to support these claims are set out. On a plain reading of the document, it is clear that the case is about the defendants allegedly breaching a contract.
[68] The plaintiff’s pleadings outline that she took out a loan by way of line of credit, in the amount of $125,000, for the benefit of the defendants. Although no formal agreement was signed, it “was always understood that the defendants would be responsible to repay the full amount of the loan.” The payment history is described, and the plaintiff describes how she has paid significant sums to keep the loan in good standing. Based on the claims for $125,000 in liquidated damages (a genuine covenanted pre-estimate of damages for an anticipated breach of contract: see Mark Woodley, ed., Osborn’s Concise Law Dictionary, 6th ed. (London: Sweet & Maxwell, 2013) and the $100,000 in pecuniary damages, it appears obvious that the plaintiff is making a claim regarding a breach of the contract described above.
[69] The defendants’ submission that there is ambiguity in who the claims are being made against is not supported by a plain reading of the amended statement of claim. The loan/agreement was made with “the defendants,” each of which is described in detail in the pleadings. Additionally, there is a closed list of four defendants, and the use of “defendants” throughout and the reference to the personal and commercial uses of the money makes it clear that the claim is being made against each defendant.
[70] The claims and who they are being made against are sufficiently clear to allow the defendants to know the case they must meet. No unfairness exists in deciding the matter. The nature of the claim was known to the defendants as early as the delivery of the statement of claim and, more recently, with the delivery of the plaintiff’s factum. The defendants had the chance to make submissions in their factum and representations on the hearing of the motion for summary judgment. It is somewhat disingenuous for the defendants to accept money and admit an obligation to repay the debt in their communications with the plaintiff, but then argue that the basis for her claim is unclear.
[71] For these reasons, I am prepared to grant summary judgment to the plaintiff. To do so, on the facts and on the evidence presented on the motion, is consistent with the liberal interpretation required by rule 1.04 of the Rules of Civil Procedure, “to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.”
[72] ORDER TO GO:
- That the plaintiff shall be granted summary judgment against all the defendants, in the amount of $155,322.82, plus interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43
[73] If the parties are unable to agree on costs, counsel may contact the trial co-ordinator within 10 days to fix a hearing date before me. I will require bills of costs and copies of all offers of settlement. If an appointment to argue costs is not sought from the office of the trial co-ordinator within 10 days, the parties will be deemed to have settled the issue of costs as between themselves.
The Honourable Madam Justice Louise L. Gauthier
Released: October 26, 2017
CITATION: Fitzgerald v. Fitzgerald, 2017 ONSC 6209
COURT FILE NO.: C-4664-16
DATE: 2017-10-26
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Kimberley Ann Fitzgerald
Plaintiff
– and –
Kevin James Fitzgerald and Kelly Lynn Fitzgerald (nee Trainor) and 1232342 Ontario Inc., o/a Aurora Research Inc. and 979072 Ontario Inc. o/a Aurora Microsystems Inc.
Defendants
REASONS FOR JUDGMENT
Gauthier, J
Released: October 26, 2017