Court File and Parties
COURT FILE NO.: CV-19-625089 DATE: 20200311 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Alexanian Law Firm Applicant – and – Desmond Patrick Blair and Easy Legal Finance Inc. Respondents
Counsel: Shahen Armen Alexanian, in person Denise Cooney, for the Easy Legal Finance Inc. Desmond Patrick Blair, in person
HEARD at Toronto: March 10, 2020
F.L. Myers J:
Reasons for Judgment
Background
[1] The applicant acted as legal counsel for the respondent Desmond Blair in litigation arising from a motor vehicle accident. Mr. Blair brought proceedings to recover statutory accident benefits and damages in tort. Both proceedings settled. The applicant asks for an order to allow it to pay into court $12,767.73 plus accruing interest from the tort claim settlement funds that it holds in trust.
[2] The respondent Easy Legal Finance claims that it is entitled to be paid from the settlement proceeds in the applicant’s trust account the amount outstanding on three loans of $2,000 each borrowed by Mr. Blair in 2014. The loans were only repayable from the proceeds of Mr. Blair’s tort claim and only after the applicant’s legal fees were paid from those funds. If Mr. Blair had not obtained net proceeds on his tort claim after costs, he would not have had to repay the loans. Repayment was expressly contingent on the positive resolution of the litigation by judgment or settlement.
[3] The total amount with accrued interest claimed by Easy Legal Finance today is more than $22,000 on $6,000 advanced over five years ago. Under the terms of the loans, interest is accruing at an effective rate of over 24% per annum. Mr. Blair has already repaid $8,190. He says that he has paid enough. He opposes any relief today and wants the funds in his lawyer’s trust account paid out to him.
[4] By contrast, with accrued interest to date, Easy Legal Finance claims another $14,075.52 from the settlement funds in Mr. Alexanian’s trust account.
[5] As part of the structure of each loan advance, Mr. Alexanian signed an undertaking to Easy Legal Finance to repay the loans plus interest from the settlement proceeds. Mr. Alexanian claims no interest in the funds apart from his costs. He does not want to be involved in any dispute between Mr. Blair and Easy Legal Finance. He proposes to pay the funds into court and leave the debtor and his lender to sort out the debt claim.
[6] Easy Legal Finance relies on Rule 43.04(2)(d) of the Rules of Civil Procedure, R.R.O. 1990, Reg 194 to ask the court to determine summarily the merits of all of the competing claims. It argues that the amount in issue is too small to justify any further proceedings. It also argues that the allegations and evidence relied upon by Mr. Blair provide no defence to his liability under the notes that he signed when he borrowed from Easy Legal Finance.
[7] Mr. Blair raises a number of concerns. He presented his arguments forcefully and with great passion. He says that he was misled by Mr. Alexanian to borrow instead of going back to work. He says that he was incapable when he signed the promissory notes. He says that Mr. Alexanian did not give him legal advice about the high interest rate in the notes despite signing certificates saying that he did so. Mr. Blair places great stress on the fact that the certificates of legal advice were signed after he signed the notes to submit that the certificates must be untrue. Mr. Blair also says that in 2017, when he settled his claim for statutory accident benefits, he told Mr. Alexanian to repay the notes. He says that Mr. Alexanian told him that the notes were repayable from the tort claim so that he should not repay them yet. Mr. Blair says that Mr. Alexanian preferred his own fees instead of repaying the notes with the SABs settlement. He says that Mr. Blair told him that the lender was a friend and Mr. Blair believes that Mr. Alexanian and his friend colluded against him.
[8] Mr. Alexanian submits that under the express terms of the notes, Mr. Blair’s debt is repaid after lawyers’ costs are paid. There was no collusion or wrongdoing in payment of counsel’s fees. Moreover, nothing prevented Mr. Blair from repaying Easy Legal Finance with his SABs proceeds (net of costs) had he wished to do so. Mr. Alexanian says that in order to ensure that Mr. Blair got his day in court Mr. Alexanian has deferred fulfilling his undertakings to pay Easy Legal Finance. Moreover, even if Mr. Alexanian gave no significant independent legal advice, despite the signed certificates to the contrary, he argues that there is no evidence that Mr. Blair did not have capacity to borrow or that he did not know and appreciate the terms of the loans that he signed. In fact, very close in time to the signing of two of the notes, Mr. Blair was engaged in a Small Claims Court trial in which he represented himself and succeeded. He is clearly an intelligent man.
[9] In his final submissions, Mr. Blair argued that if Mr. Alexanian would not repay the notes in 2017 then he should have gone to trial on the SABs claim. Mr. Blair did not accept any responsibility for approving the settlement of that claim. He argues that Mr. Alexanian’s evidence and arguments are false. He wants Mr. Alexanian to be responsible for any interest that accrued after the SABs settlement in 2017.
Analysis
[10] Although Mr. Blair repeated twice a written statement to the effect that the court should not resolve the matter summarily, he actually asked me to do just that in submitting that the court should find Mr. Alexanian liable for any remaining interest due to Easy Legal Finance. It is obvious to me that Mr. Blair has an issue with Mr. Alexanian. But Mr. Blair borrowed and used Easy Legal Finance’s funds. He clearly stated that he had read the loan and disclosure documents before signing them. Both are brief and written in plain English.
[11] Mr. Blair has put into evidence some of the medical reports from his motor vehicle litigation. None of them raise an issue of Mr. Blair’s capacity to contract. Mr. Blair did not rely on incapacity orally before me. Rather, Mr. Blair feels that he was tricked into a loan sharking arrangement (to use his words).
[12] Mr. Blair has not commenced any form of claim against Mr. Alexanian.
[13] As against Easy Legal Finance, Mr. Blair did not adduce any evidence to undermine his indebtedness. He did not rely on any breach of consumer protection and disclosure laws. He did not raise a non est factum defence. He raised no defence or triable issue under his notes in evidence.
[14] Moreover, the amount in issue of just over $14,000 is too small to justify further proceedings among these parties. Were I to direct a three-way trial of the issues, the ongoing interest accrual and costs will dwarf the amount in issue in no time.
[15] Moreover, there are no triable issues between Mr. Blair and Easy Legal Finance. Mr. Blair recognizes the validity of his debt. He paid $8,190 without protest. His complaints about the delayed timing of repayment and the accrual of interest are aimed at Mr. Alexanian and do not undermine the notes. The interest rate under the notes is legal. The notes were a contingent, very risky form of lending of last resort that carry very high interest rates. Mr. Blair raised no legal basis to deny his liability for his debt.
[16] The applicant shall therefore pay to Easy Legal Finance from the amounts held in trust from Mr. Blair’s tort claim settlement the sum of $14,075.52 plus costs of $2,600 on a partial indemnity basis in satisfaction of its and Mr. Blair’s liability under Mr. Blair’s notes and the applicant’s undertakings to Easy Legal Finance. All liability of Mr. Blair and the applicant to Easy Legal Finance is wholly extinguished upon this payment being made.
[17] However, I am not in a position to find facts in relation to Mr. Blair’s assertions against Mr. Alexanian. As noted above, Mr. Blair has not advanced a claim against his lawyer as yet. I am not aware of the state of accounts as between Mr. Alexanian and Mr. Blair. If Mr. Blair is so advised, nothing in this decision limits his rights to advance any claims that he may have against Mr. Alexanian or the applicant in the Small Claims Court.
[18] Mr. Alexanian might argue that there is a risk of inconsistent findings in that he could have responded to a claim by Mr. Blair by arguing that the claim of Easy Legal Finance was unenforceable. However, in his evidence, factum, and argument before me, Mr. Alexanian plainly and completely sided with the lender. He argued that the debt was valid even if he did not give sufficient independent legal advice. He was not a neutral party holding the stakes as between two combatants. He has an interest in fulfilling his undertakings to the lender and in fending off claims of Mr. Blair. I am sure that he feels that he is being taken advantage of by Mr. Blair and that no good deed goes unpunished. But he has elected to advance the position in this proceeding that the debt is valid. That election bars him from taking an inconsistent position or claiming over against Easy Legal Finance in another proceeding.
[19] I am certainly not to be taken as suggesting, let alone finding, that Mr. Blair has any valid claims against Mr. Alexanian. But Mr. Blair is entitled to be heard and to have his day in court if he can state a valid claim within the applicable limitation period. Mr. Blair may decide that he does not really have a claim against Mr. Alexanian. Or he may try to advance a claim. That is not before me.
[20] I therefore decline to make an order extinguishing any liability between the applicant and Mr. Blair other than liability that might otherwise arise solely from the payment by the applicant to Easy Legal Finance as ordered above.