Court File and Parties
COURT FILE NO.: 93561/15 SR DATE: 2018-05-18 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Tony D’Souza and Helen D’Souza, Plaintiffs AND: Cargo International Marketing Inc., and Francis Gomes, Defendants
BEFORE: Justice J. Bryan Shaughnessy
COUNSEL: Kyle C. Armagon for the Plaintiffs Defendants unrepresented and not attending trial
HEARD: May 16, 2018
ENDORSEMENT
[1] The Plaintiffs and Francis Gomes and his spouse Angie Gomes had been close friends for more than 15 years.
[2] Tony D’Souza was not a wealthy man and he worked doing accounting work.
[3] Francis Gomes operated a company called Cargo International Marketing Inc. (herein after to as CIM)
[4] In October 2013 Francis Gomes approached both the Plaintiffs and told them that he had a contract for work which would provide $ 1 million in revenue to his company CIM. He told Tony D’Souza that he was tight for funds and he needed to show that CIM had money in the bank for the contracts to be completed. Francis Gomes originally asked the Plaintiff’s to loan him $ 100,000, when the Plaintiffs said they did not have that money, Gomes then asked for $ 50,000 and finally $ 25,000. Gomes was calling the Plaintiff sometimes three times a day. Gomes was telling the plaintiff that he would have an agreement prepared and he would pay generous interest and he would be personally guaranteeing payment of the amount due plus the interest. Tony D’Souza testified that he and his wife valued the relationship with the Gomes’ and agreed to loan $ 25,000 to Francis Gomes personally.
[5] Francis Gomes had prepared a “Loan Agreement” dated October 23, 2013 (Exhibit # 2 tab 1). The Agreement was for a loan of $ 25,000. The “lender” was Tony and Helen D’Souza. The borrower was CIM. The principle amount was for $ 25,000. The term of the loan was from October 23, 2013 to November 7, 2013. Paragraph 2.3 of the loan agreement provided that the loan would bear $10,000 interest for the term of the loan. It is important to note that Gomes drafted the loan agreement and he inserted the amount of interest.
[6] On October 23, 2013 Gomes goes with Tony D’Souza to the Bank. Tony D’Souza and his wife had to take out a loan themselves to pay Gomes $ 25,000. As the bank draft was about to be drawn Francis Gomes asked Tony D’Souza to make the funds payable to CIM as the funds would be immediately deposited whereas with a draft to Francis Gomes would take 5 days to clear the Bank. Tony D’Souza agreed to the request.
[7] Tony D’Souza relied on Francis Gomes assurances that he would be personally paying back the loan.
[8] The Plaintiffs became concerned when the date of November 7, 2013 passed and there was no repayment. They called Gomes who gave them a variety of excuses. Subsequently, Gomes contacted the Plaintiffs on December 2, 2013 and said that he needed the money for two months. Gomes met with the Plaintiffs and he on his own initiative altered para 2.3 of the Loan Agreement such that the term was from October 23, 2013 to December 31, 2013 and the total amount of interest for the period of the loan was increased to $ 20,000. Gomes told the Plaintiffs that the delay in repayment was because he was under an audit by Canada Revenue Agency. Again he promised them that he would personally repay them.
[9] On March 31, 2014, after numerous phone calls from the Plaintiffs, Francis Gomes goes to the D’Souza home and he gives a cheque made payable to Helen D’Souza dated April 10, 2014 in the amount of $ 25,000 drawn on the personal bank account of Francis D’Souza with a notation that it is for “Loan Repayment.” Francis Gomes tells the Plaintiffs not to cash the cheque as there were insufficient funds in the bank account. Francis Gomes also provided yet another cheque payable to Helen D’Souza for $ 30,000 dated April 11, 2014 drawn on Francis Gomes personal bank account with a note that it was for “Loan Repayment.” Gomes told the Plaintiffs that this was for the interest component of the loan. Again Gomes told the Plaintiffs not to cash the cheque as there was not sufficient funds in the bank account. Gomes told the Plaintiffs that he would let them know when they could cash the cheques. These cheques never cleared the bank.
[10] By July 2015 after numerous excuses and broken promises the plaintiffs stated that they were going to proceed with litigation to collect on the debt. Again Francis Gomes assured the Plaintiffs that he would personally pay them. At Exhibit #2 tab 5 is a copy of a letter dated July 3, 2015 sent by both Francis Gomes and his wife Angie Gomes wherein they state that the “amount borrowed ($25,000) will be fully and/or partially paid from the proceeds of sale of our house at 3567 Ghandi way (sic) Mississauga ON” This was followed up by an email dated July 9, 2015 wherein Francis Gomes and Angie Gomes again state that the full amount owing will be paid. (Exhibit # 2 tab 6). Yet again the Gomes’ in two letters dated July 14, 2015 indicates that the loan would be paid off from the proceeds of the sale of their home which they anticipate to be August 31, 2015.(exhibit #2 tabs 7 and 8).
Adjournment Request
[11] The Defendants were represented by legal counsel up to and including a judicial pretrial held in this matter. I am advised by the Trial Coordinator that when she called Mr. Gomes on May 15, 2018 to advise him that this matter was scheduled to be heard on May 16 at 2:00 pm Mr. Gomes responded that he was busy and he thought he would be given one to two weeks advance notice. The Trial Coordinator advised Francis Gomes that he was wrong in his assumption and that the matter was being called in for trial. Mr. Gomes then told the Trial Coordinator that he had a kidney stone issue. The Trial Coordinator advised Mr. Gomes that either he or a representative on his behalf should arrange to speak to the case on May 16 at 2:00 pm. Mr. Gomes then left a voice mail message on the Trial Coordinator’s line indicating he had a kidney stone and was attending on a doctor. Neither Mr. or Mrs. Gomes or any other person attended in court on May 16, 2018.
[12] There is no satisfactory evidence or information before this Court that Mr. Gomes could not attend this trial. I do not accept his proffered reasons to the Trial Coordinator for not attending. Nor did he send anyone to speak to the matter as he was advised by the Trial Coordinator.
[13] The narrative provided herein is outlined so that any appellate court will have an understanding of what this Court determined.
[14] There are two issues raised in the statement of defence. The first issue related to an allegation that a “criminal rate of interest” was charged on the loans. This issue is defeated based on the evidence of Tony D’Souza which I accept as honest, credible and reliable that it was Gomes who drafted the loan agreement and subsequent amendments including the interest amounts. Further, Counsel for the Plaintiff advised the Court at the outset that the Plaintiff was only seeking a judgment for the amount of the loan ($25,000) plus prejudgment interest in accordance with the Courts of Justice Act.
Issue: Personal Guarantee
[15] I have considered that the Loan Agreement on its face was between the Plaintiffs and CIM.
[16] Likewise the Bank draft in the amount of $ 25,000 was made payable to CIM. Yet there is the evidence of Mr. Tony D’Souza which I find credible and reliable explaining how the agreement came about and the last minute change on the bank draft at the Bank was at the request of Francis Gomes. Tony D’Souza and his spouse were not lenders or sophisticated investors. The sole purpose of assisting Francis Gomes was to help him and his spouse with a loan to assist them with a financial issue for a short period of time. The basis of the loan, I accept, was based on a 15 year friendship of the families. Indeed the subsequent letters and emails referenced above are confirmatory that the loan was personal. The words used by Francis Gomes and the cheques provided on his personal bank account are more consistent with all parties proceeding with the loan on the basis that Francis Gomes was obtaining a loan from a friend and he was guaranteeing repayment on a personal basis. I accept the evidence of the Plaintiff and I find that Francis Gomes told him that he personally guaranteed that he and his wife would pay the loan in full and indeed the payment would come from the sale of their home.
[17] I further base my decision on the decision of Justice Archie Campbell in Active Custom Brokers Ltd. v Sack 1987 CarsewellOnt. 138 at paras 6-9. I particularly adopt para 7 of that decision and the issue whether the defendant Sack had a substantial benefit or interest such as would take the guarantee out of the Statute of Frauds.
[18] Read in as part of the Plaintiffs’ case were admissions made by Francis Gomes at his discovery of June 15, 2016 where he admitted that he was attending the discovery on behalf of CIM as well as in his personal capacity. Further there was an admission that he was the owner and sole-shareholder of CIM.
[19] I find on the evidence that Mr. Gomes had a personal property interest in CIM and he made a personal promise to personally repay the loan. The promise was made to protect his own interest in CIM. Accordingly his promise was not, in substance, to pay the debt of another but rather a promise to pay $ 25,000 that was substantially his own debt. Therefore, I find that the Plaintiffs are entitled to enforce the guarantee of Francis Gomes, notwithstanding the absence of explicit wording usually used in a commercial loan.
Conclusion
[20] I find that the Plaintiffs have proven their case on a balance of probability and accordingly will have judgment against both defendants as follows:
Damages in the amount of $ 25,000.00
Prejudgment interest at the rate established by the Courts of Justice Act calculated from March 31, 2014.
Costs on a Partial Indemnity basis assessed in the amount of $5,615.92
Assessment of Costs
[21] Counsel for the Plaintiff presented a Bill of Costs which I have reviewed. The Plaintiff seeks total costs of $ 7,485.14 which is comprised of Fees and HST of $ 5,869.22 plus disbursements of $ 1,615.92.
[22] After considering all the principles and Rules relevant to assessment of costs and after considering proportionality, the time expended and issues raised in the statement of defence that an appropriate fee would be $ 4,000 inclusive of HST plus disbursements in the amount of $ 1,615.92. Total of fees and disbursements are assessed at $ 5,615.92.
[23] Judgment, accordingly.
Justice J. Bryan Shaughnessy
Dated May 18, 2018