COURT FILE NO.: 19-71252
DATE: 20200916
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: SYLVITE AGRI-SERVICES LTD., Plaintiff/Moving Party
AND: TREVOR PARKES and ESTHER PARKES, Defendants/Responding Parties
BEFORE: JUSTICE L. SHEARD
COUNSEL: Michael J. Valente for the Plaintiff/Moving Party Trevor Parkes and Esther Parkes, In Person
HEARD: September 14, 2020, by ZOOM Videoconference
REASONS FOR DECISION ON MOTION
Overview
[1] The plaintiff, Sylvite Agri-Services Ltd. (“Sylvite”), moves for summary judgment against the defendants, Trevor Parkes and Esther Parkes, on a guarantee given by the defendants dated November 24, 2016 (the “Guarantee”). The Guarantee was given as part of a settlement reached between Sylvite and Turf Canada Inc. (“Turf”).
[2] At the hearing, judgment was granted in favour of Sylvite in the principal amount of $90,000, together with pre-judgment and post-judgment interest on that sum payable at the Interest Act[^1] rate of five per cent per annum, calculated from November 13, 2019, the date demand was made under the Guarantee, to today’s date (306 days), with reasons to follow. These are the reasons.
Factual Background
[3] Trevor Parkes is a principal of Turf; Esther Parkes is his spouse. In March 2016, Sylvite sued Turf for payment of over $237,000 in outstanding invoices and interest on unpaid invoices. In November 2016, Sylvite moved for summary judgment on its claim. The parties reached a settlement of the claim (“the Settlement”) in which, among other things, Sylvite agreed to accept $150,000.00 in satisfaction of its claim. Payment was to be made in three instalments: 1. $40,000.00 by December 15, 2026; 2. $20,000 by January 31, 2017; and, 3. $90,000 by April 28, 2017.
[4] The Settlement required Turf to consent to a judgment, to be held in escrow by Sylvite and returned to Turf upon payment in accordance with the Settlement (the “Consent Judgment”).
[5] The Settlement also required Mr. and Mrs. Parkes to execute the Guarantee, by which they jointly and severally guaranteed Turf’s indebtedness to Sylvite as set out in the Settlement. The Guarantee was limited to the principal sum of $150,000, less any amounts paid prior to Turf’s default. Interest on amounts owing under the Guarantee was to accrue “at the rate of 2% per month from the date of default.”
[6] The parties agree that Turf made the first two payments in accordance with the Settlement however, the $90,000 due on April 28, 2017 was not paid when due. Instead, the $90,000 was paid in the following four instalments:
2017 May 23 $30,000
2017 May 26 $15,000;
2017 June 19, $20,000; and
2017 June 21 $25,000.
[7] In his affidavit sworn August 11, 2020, Mr. Parkes states that Sylvite accepted the late payments without complaint. However, because he recognized that the payments were late, Mr. Parkes offered to pay interest on the late payments at the rate of 24% per annum. Sylvite did not respond to his offer.
[8] In October 2017, Mr. Parkes made a different offer to settle, offering to pay Sylvite $40,000 in two payments: $20,000 on October 27, 2017 and $20,000 on December 25, 2017. Mr. Parkes states that on November 15, 2017, he and Mrs. Parkes made a third settlement offer whereby they would pay Sylvite $45,000 in three payments: $15,000 in December 2017, $15,000 in January 2018 and $15,000 in April 2018.
[9] Mr. Parkes says that Sylvite did not respond to these further offers.
[10] Mr. Parkes’ affidavit fails to mention that Mr. Parkes’ offers to pay interest were made only after Sylvite had brought a motion for summary judgment on the Settlement, following Turf’s default on April 28, 2017. Sylvite’s motion was first returnable on June 20, 2017. Seen in the
context of Sylvite’s pending motion, it is reasonable to view Sylvite’s refusal to accept Mr. Parkes’ offers as Sylvite’s unwavering intention to enforce the Settlement and to proceed with its motion for summary judgment.
[11] Sylvite was successful on its motion for summary judgment, which was heard, and granted, on November 16, 2017. Turf was ordered to pay Sylvite the principal sum of $166,122.52, plus interest, to and including November 16, 2017, in the amount of $18,051.56 for a total of $184,174.08 (“the Judgment”). The Judgment also awarded interest on the $166,122.52 to accrue at the rate of 2% per month from November 16, 2017 to the date of payment. Sylvite was also awarded costs of $7,500
Demand on the Guarantee
[12] By letter dated November 13, 2019, Sylvite, through its lawyers, demanded payment under the Guarantee for the indebtedness of Turf to Sylvite under the Judgment. Sylvite calculated the amount then owing by Turf to be $274,670.41.
[13] The undisputed evidence on this motion is that no payments have been made to Sylvite either in respect of the Judgment or by Mr. Parkes or Mrs. Parkes following the demand on the Guarantee.
[14] The position taken by Mr. Parkes and Mrs. Parkes on this motion is almost identical to the position taken by Mr. Parkes in his affidavit of July 21, 2017, sworn in defence of Sylvite’s motion for summary judgment against Turf. In that affidavit, Mr. Parkes asserted that
(a) the Settlement had been “substantially fulfilled in spirit and intent and that Sylvite … should be estopped making claims for any amount of money above and beyond the $150,000 received by it.”;
(b) Sylvite would be “unjustly enriched and it would certainly not be fair or equitable for Sylvite to receive any more money than what was agreed upon in the Settlement… Even though the last portion of the settlement amount was not paid on the specific date initially agreed upon.”; and
(c) It would be “harsh, in equitable, unreasonable and unconscionable for Sylvite to demand more money than what it has received in the circumstances other than… perhaps interest on the $90,000…paid by June 21, 2017”.
[15] Sylvite submits that by granting the Judgment, the motions judge rejected Mr. Parkes’ arguments and those issues are res judicata; to the extent that the same arguments are advanced on this motion, they should be given no weight.
Issues to be decided: On a motion for summary judgment, is the court able to determine what amount, if any, is due and owing by the defendants pursuant to the Guarantee?
[16] Rule 20.04 permits a plaintiff to move for summary judgment, which shall be granted if the court is satisfied that there is no genuine issue requiring a trial (r. 20.04 (2)). It is well-established that the moving party bears the onus of establishing that there is no genuine issue requiring a trial and that the responding party cannot rely on allegations or denials in the pleadings but must present evidence demonstrating that there is a genuine issue for trial (see Hryniac v. Maulden, 2014 SCC 7; Da Silva v. Gomes, 2018 ONCA 610).
[17] On this motion, the evidence is unchallenged that
payment was not made in accordance with the Settlement;
the defendants signed the Guarantee;
Judgment was issued on November 16, 2017 pursuant to which, Turf was found to owe Sylvite the principal amount of $166,122.52;
after June 21, 2017, no payments were made to Sylvite to reduce Turf’s indebtedness; and
no payments have been made toward satisfaction of the Judgment or, following Sylvite’s demand of November 13, 2019, under the Guarantee.
[18] In his affidavit and in oral submissions, Mr. Parkes stated that Mrs. Parkes was neither a principal, nor a shareholder, of Turf. However, neither defendant has alleged, nor is there evidence before me on this motion that does, or could, call into question Mrs. Parkes’ liability under the Guarantee. In her oral submissions on this motion, Mrs. Parkes acknowledged signing the Guarantee but stated that neither she, nor Mr. Parkes, anticipated the health challenges that were later suffered by Mr. Parkes or the financial difficulties caused by Mr. Parkes’ poor health and other causes.
[19] At the time of Settlement, the evidence clearly shows that Turf and the defendants were represented by counsel, and that their counsel witnessed the Parkes’ signatures on the Guarantee. The correspondence leading to and ultimately evidencing the Settlement shows also that the parties intended to create a binding contract, containing strict timelines and enforcement provisions.
[20] I accept the defendants’ evidence and oral submissions that they wanted to honour the payment terms set out in the Settlement and came very close to doing so. However, payment was not made in accordance with the Settlement. Consequently, Sylvite was entitled to enforce the Settlement, which resulted in the Judgment. The Judgment remains unpaid and Sylvite is entitled to seek to enforce its rights under the Guarantee.
[21] I conclude that this case is well-suited for a motion for summary judgment. I conclude that I need not resort to the fact-finding powers available to the court pursuant to r. 20.04 (2.1) and (2.2) and find that there are no genuine issues that require a trial.
Interest Rate
[22] In the course of the motion, I raised a concern that the interest rate payable by the defendants was not in accordance with the Interest Act. Sections 4 and 5 of the Interest Act state as follows:
Except as to mortgages on real property or hypothecs on immovables, whenever any interest is, by the terms of any written or printed contract, whether under seal or not, made payable at a rate or percentage per day, week, month, or at any rate or percentage for any period less than a year, no interest exceeding the rate or percentage of five per cent per annum shall be chargeable, payable or recoverable on any part of the principal money unless the contract contains an express statement of the yearly rate or percentage of interest to which the other rate or percentage is equivalent.
If any sum is paid on account of any interest not chargeable, payable or recoverable under section 4, the sum may be recovered back or deducted from any principal or interest payable under the contract.
[23] Nowhere in the Settlement, in the Judgment or in the Guarantee, is there “an express statement of the yearly rate or percentage of interest to which the other rate or percentage is equivalent.” At the hearing, I raised the issue of whether s.4 of the Interest Act applied. After hearing submissions, I conclude that s. 4 of the Interest Act does apply and that interest charged on the Settlement and under the Guarantee is limited to five per cent per annum. (see Harvey Kalles Realty Inc. v. BSaR (Eglinton) LP, 2019 ONSC 4434)
Amount available under the Guarantee
[24] By its revised draft judgment, which differs from the relief sought in its Notice of Motion, Sylvite acknowledged that the defendants’ liability under the Guarantee was $90,000: $150,000 less the $60,000 paid by Turf prior to default, plus interest on that amount calculated from the date of demand (November 13, 2019). Counsel for Sylvite explained that it was only after receiving the full file from Sylvite’s prior counsel, did they become aware of the credit to be given for payments made prior to default. That term is part of the Settlement but not mentioned in the Guarantee.
[25] In determining the defendants’ liability under the Guarantee, I considered the defendants’ submission that Turf ultimately paid Sylvite $150,000 and that no further monies should be payable to Sylvite except, perhaps, for some interest on the late payments. That argument cannot succeed. Firstly, as security for the payments to be made by Turf under the Settlement, Turf agreed to the Consent Judgment in favour of Sylvite in the amount of $266,347.66 ($179,065.10 + $67,282.56 + $20,000), plus interest. Secondly, in the Judgment, a court has determined that the principal amount then owing by Turf to Sylvite to be $166,122.52.
[26] Having identified as an issue the rate of interest chargeable by Sylvite, I looked at the amount that might be owing by Turf, even without interest. Starting with the Consent Judgment amount of $266,347.66 and reducing that amount by the $150,000 paid by Turf, Turf would still owe Sylvite $116,347.66. Because Sylvite asks for judgment of $90,000 as against the guarantors, together with interest on that amount, which is less than Turf’s indebtedness of $116,347.66, I am satisfied that there is no possibility that the amount sought by Sylvite will lead to double recovery.
Disposition
[27] For the reasons set out above, judgment was granted to Sylvie as set out above.
[28] Following the granting of judgment, the parties were invited to make costs submissions. As the successful party, Sylvite was presumptively entitled to its costs. In submissions, counsel for Sylvite advised that, while Sylvite made an offer to settle based on a payment by the defendants of $90,000 together with interest on that amount at the rate of 24% per annum, a lesser amount was awarded on the motion and that Sylvite would only be entitled to its costs on a partial indemnity basis.
[29] Sylvite’s counsel advised that Sylvite’s partial indemnity costs are $14,729 but that Sylvite was seeking costs of this motion fixed in the amount of $10,000, inclusive of disbursements and taxes.
[30] The thrust of the Parkes’ response to Sylvite’s costs submissions was that they are in financial difficulty and have no ability to pay the judgment, with or without an award of the costs.
[31] Based on the submissions of counsel and the parties, I determined that a fair and reasonable cost award to be $8,500, inclusive of fees, disbursements and taxes.
[32] Judgment is granted to Sylvite as against Trevor Parkes and Esther Parkes pursuant to the Guarantee as follows:
Payment of the principal sum of $90,000.
Pre-judgment and post-judgment interest on the principal sum at the rate of five per cent per annum payable from and after November 13, 2019 to September 14, 2020.
Costs fixed at $8,500.
[33] Counsel for Sylvite has offered to prepare a draft judgment for review by the defendants and submission to the court for signature.
_______________________________ Justice L. Sheard
Date: September 16, 2020
COURT FILE NO.: 19-71252
DATE: 20200916
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Sylvite Agri-Services Ltd.
Plaintiff/Moving Party
- and –
Trevor Parkes and Esther Parkes
Defendants/Responding Parties
REASONS FOR DECISION
LS:js
Released: September 16, 2020