COURT FILE NO.: 17-60256 DATE: 2021-03-30
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
PHYSIOMED HEALTH HOLDINGS INC. AND ANNE WILSON Plaintiffs
- and -
MEDCAP REAL ESTATE HOLDINGS INC. and 2503866 ONTARIO INC. Defendants
COUNSEL: R. Allan, for the Plaintiffs F. Scott Turton, for the Defendants
HEARD: January 11 and March 10, 2021
REASONS FOR JUDGMENT
A.J. GOODMAN J.:
[1] This is a motion for summary judgment to enforce the terms of a Promissory Note dated March 4, 2016 (“the Promissory Note”). brought by the plaintiffs.
[2] The plaintiffs, Physiomed Health Holdings Inc. (“Physiomed”), is a corporation whose principal is Scott Wilson (“Scott”). Anne Wilson (“Anne”) is the ex-spouse of Scott.
[3] The defendant, Medcap Real Estate Holdings Ltd. (“Medcap”) is a corporation whose principal is John Cardillo (“Cardillo”).
[4] 2503866 Ontario Inc. (“250”) is a corporation and Steven Reichert (“Reichert”) is a director. The plaintiffs allege that Cardillo is the actual directing mind of 250 and/or has the requisite authority to bind the company.
[5] Julie Catenacci (“Catenacci”) is a director of 1927032 Ontario Inc. (“192 Ontario”) and 1869461 Ontario Inc. (“186 Ontario”). Catenacci is Cardillo’s niece. The plaintiffs have discontinued this action against these two defendants.
[6] Physiomed and its principal Scott commenced a separate action against Medcap and Cardillo, for payment on a promissory note dated August 23, 2013. This promissory note is secured by a second mortgage registered on the Upper Wentworth Property (the “Mortgage Action”), and therefore, the Mortgage Action seeks judgment and possession of the Upper Wentworth Property.
[7] Cardillo was cross-examined in the Mortgage Action on May 23, 2017 (the “Mortgage Cross-Examination”). Cardillo was then cross-examined in this proceeding on September 10, 2019. Reichert was also cross-examined in this action on September 10, 2019. After the first appearance before me and based on the initial submissions of defendant’s counsel, I afforded an opportunity to all parties to conduct further cross-examinations on their affidavits in order to clarify certain issues, which was not undertaken.
[8] As expressed to the parties at the conclusion of their submissions and for the reasons that follow, the motion for summary judgment is granted.
Legal Principles:
[9] Under Rule 20.01 (1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a plaintiff may move for summary judgment on all or part of a claim in the Statement of Claim, with supporting affidavit material or other evidence, after the defendant has delivered a Statement of Defence.
[10] Summary judgment is available when the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. In determining whether a genuine issue is present, the court must consider the evidence submitted by the parties and relevant legal principles. In doing so, the judge may exercise any of the following powers for this purpose, unless the interests of justice require that such powers be exercised only at a trial, including the weighing of the evidence, evaluating the credibility of a deponent and drawing reasonable inferences: Hryniak v. Mauldin, 2014 SCC 7, at paras. 43, 44 and 45.
[11] The evidence is deemed to be sufficient to grant summary judgment if the motions judge is confident that the dispute can be resolved fairly. The evidence does not need to be the same as equivalent to the evidence at a trial: Hryniak, at para. 57.
[12] A judge should determine if there is a genuine issue requiring a trial based only on the evidence before him/her, without using the new fact-finding powers. There will be no issue requiring a trial if the summary judgment process provides him/her with the evidence required to fairly and justly adjudicate the dispute under rule 20.04(2.1) and (2.2). A judge may employ the expanded fact-finding powers at his/her discretion, provided that it is not against the interests of justice and will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole: Hryniak at para. 66.
[13] The mere possibility that a defence may exist if the action is permitted to proceed to trial is not sufficient. Where the plaintiff has made out a prima facie case, the defendant must show the defence has a real chance of success. Each side must “put their best foot forward”.
[14] The judge is entitled to draw inferences from the evidence on a common-sense basis and may look to the overall credibility of a party’s case. Merely raising an issue of credibility will not be an answer. Issues of credibility must be genuine and not spurious: Bhakhri v. Valentim 2012 ONSC 2817 at para. 8.
Plaintiffs’ Position:
[15] The plaintiffs say that the Promissory Note is straightforward and is a Bill of Exchange. This action is fundamentally a case that can be determined on the documents. The Note is an unconditional written promise to pay a certain sum signed by the defendant payable to the plaintiff on demand, which has not been fulfilled.
[16] Under this Promissory Note, the plaintiffs seek payment of the principal sum of $293,210 plus applicable interest. The amounts owing relate to two advances. The first advance was made by Anne for the principal sum of $43,210. The second advance was made by Physiomed for the principal sum of $250,000.
[17] Medcap does not deny that it received the sum of $293,210. However, the plaintiffs submit that its defence and positions are ever changing, shrouded in ambiguity and completely lacking in directness. For instance, Medcap did not specifically deny signing the Promissory Note in its Statement of Defence of March 28, 2017, even acknowledging its existence, describing the Promissory Note as a “concept being discussed” between Cardillo and Scott.
[18] The plaintiffs say that in the defendants’ responding materials, it referred to the Promissory Note as a “concoction” then claiming that the document was “unfamiliar” to Cardillo, calling the document’s authenticity into question. This position is not specifically pled in the Statement of Defence and the defendants have never requested to inspect the Promissory Note. After insurmountable evidence was put forward to refute these alleged authenticity issues, Medcap again reversed its position, with Cardillo now recalling the existence of the Promissory Note and even acknowledging his signature thereon. Regardless, Medcap has never denied receiving the funds in question.
[19] The plaintiffs allege that Cardillo is in fact the directing mind of 250, and at all times, had authority to bind the company, and did in fact do so by signing the Promissory Note on behalf of 250.
[20] Alternatively, the plaintiffs submit that if the defendants are not bound by the Promissory Note, they are liable on the basis of unjust enrichment. The plaintiffs submit that this matter is ripe for summary judgment.
Defendants’ Position:
[21] The defendants say that there is a fundamental difference between the plaintiff and the defendant. The defendants submit that the 2016 Loan Agreement was prepared by Scott and is Physiomed’s document. This agreement contains nothing in respect of 250.
[22] Medcap is, at best, a guarantor and not a party to this agreement. The Loan Agreement is not a promissory note and not signed by the makers of the promise to pay.
[23] The defendants claim that there is a valid set-off and a viable counterclaim in this action. The plaintiffs’ attempted ouster of damages for set-off is without legal or factual foundation and must be determined at trial.
[24] The defendants argue that the affidavit evidence is flush with differing versions of events by the parties and the determination of the case will be highly dependent upon assessments of credibility. This matter must proceed to trial on a full record and an accounting. Moreover, this matter goes beyond just the Note as framed by the plaintiffs or the documents filed. The defendants submit that this summary judgment motion ought to be dismissed as it has contributed nothing to the goals of proportionate, timely, and affordable justice.
Facts:
[25] Medcap is the owner of the property municipally described as 635 Upper Wentworth, Hamilton, Ontario (the “Upper Wentworth Property”). In March 2016, the Upper Wentworth Property was encumbered by a first mortgage held by Sun Life Assurance Company (“Sun Life” and the “Sun Life Mortgage”). Medcap was in default of the Sun Life Mortgage at that time and sought funds to pay out the mortgage in its entirety. The amount owing under the Sun Life Mortgage on or about March 4, 2016 was $1,432,181.03. $250,000 of the funds advanced by Physiomed under the Promissory Note were directed by Medcap/Cardillo to be paid to Medcap’s counsel, Maureen Tabuchi. Ms. Tabuchi used the advanced sum of $250,000 to make payment on the sum owing under the mortgage.
[26] This payment was made for the purpose of paying out the Sun Life Mortgage. 250 used the funds and took an assignment and the transaction was completed. 250 now holds a first charge position on the Upper Wentworth Property.
Analysis:
[27] As stated to the parties at the conclusion of the hearing, I rejected all of the defendants’ claims and assertions. The primary defence asserted by the defendants is that Physiomed and Medcap have an ongoing system of setting off various debts, and that Medcap is actually owed money by Physiomed. Notably, no formal or informal accounting (or even a simple calculation) has been put into evidence to quantify or even explain the current state of the indebtedness even though some of the alleged set-off claims date back several years.
[28] There is no evidence of this alleged system of set-off, despite the hundreds of wholly irrelevant documents put into evidence by the defendants, not a single one of which makes reference to a set-off of these debts or a set-off at all.
[29] In any event, I am satisfied that the plaintiffs have established the existence of a Promissory Note in fact and law. The alleged application of set-off against the Promissory Note would be in direct contravention of the terms of the Promissory Note and would also contravene the Bills of Exchange Act, prohibiting set-off on a promissory note.
[30] Moreover, Medcap’s set-off claims/defences are wholly unrelated to the Promissory Note that is sought to be enforced. They are also clearly statute barred.
[31] On this record, I accept that on August 18, 2015, Anne advanced Medcap the sum of $43,210. Anne was told by Cardillo that Medcap was using this sum to make payments on its mortgage on the Upper Wentworth Property. This advance is not disputed. In a purported effort to pay back the sums advanced by Anne, Cardillo/Medcap provided her with a cheque dated August 31, 2015 made out to “Anne Wilson” for the sum of $43,210. The cheque from Medcap was returned NSF, and with the exception of a single interest payment made in January 2016 for the sum of $885, no payments have been made to Anne under this advance.
[32] Accordingly, by March 2016, the principal sums owing to Anne remained outstanding. Various text message exchanges between the periods of November 2015 to February 2016 indicate that Anne had been requesting payment for the sums owing from Cardillo.
[33] Sometime during the early part of 2016, Cardillo, on behalf of Medcap, began requesting monies from Physiomed. Medcap was in default of the Sun Life Mortgage and Cardillo had been requesting that Physiomed advance monies to Medcap so that it could cure the mortgage default and have the Sun Life Mortgage paid out entirely.
[34] In or around the early part of March 2016, Physiomed agreed to advance the sum of $250,000, as requested by Cardillo. Cardillo explained that the advance would be made or directed to one of his companies, 250.
[35] I accept that the funds of $250,000 were being used by 250 to payout the Sun Life Mortgage registered on the Upper Wentworth Property and to take an assignment thereof. Multiple emails between Cardillo and Scott between March 3, 2016 and March 4, 2016 demonstrate the parties were discussing the advance from Physiomed. In fact, in an email dated March 4, 2016, Cardillo provides Scott with the Promissory Note as an email attachment. The Promissory Note was signed by Cardillo on behalf of Medcap. Since Anne had not been paid back the advance of $43,210, the indebtedness of Medcap to Anne was included and/or acknowledged on the Promissory Note.
[36] As requested by Cardillo, the cheque from Physiomed for the sum of $250,000 was made payable to counsel for Medcap, Ms. Tabuchi. On the morning of March 4, 2016, Scott and Cardillo met at a Starbucks coffee shop. At that time, Scott advised Cardillo that, since the company taking an assignment of the Sun Life Mortgage was 250, that this entity ought to be bound by the terms of the Promissory Note. Cardillo agreed, and in turn, signed the Promissory Note on behalf of 250 without qualification. In fact, Cardillo purposely chose not to discuss any issues related to this arrangement, specifically, alleged outstanding rent payments or other debts; all in order to obtain the necessary funds from Scott on behalf of Physiomed.
[37] As noted, the $250,000 advance by Medcap was delivered by Ms. Tabuchi on March 4, 2016 in certified funds. On that same day, Ms. Tabuchi paid the sum of $1,432,181.03 to Sun Life. These monies were paid for the purpose of having 250, (a non-arm’s length corporation) pay out and take an assignment of the Sun Life First Mortgage, which it did.
[38] As admitted by Cardillo during the Mortgage Cross-Examination, the $250,000 advance made by Physiomed under the Promissory Note was used as part of the funds to pay Sun Life.
[39] During the Mortgage Cross-Examination, Cardillo was referred to the Promissory Note, and then acknowledged that this payment of $250,000 was made in connection with said promissory note (a document he would later deny the authenticity of). Further confirmation was then provided by Cardillo during the Mortgage Cross-Examination that the funds were used to pay out the Sun Life Mortgage. In relation to another action, Cardillo deposed that he discussed this with Wilson and what the parties came up with was the concept that there be an agreement that Wilson’s mortgages would rank pari passu. The Postponement and Pari Passu Agreement was not signed.
[40] Mr. Allan opines that this entire exercise to assign the mortgage to 250 was engaged to defeat the interests of the various creditors. While I need not decide this issue, I tend to agree with plaintiffs’ counsels’ characterization.
[41] This particular action does not go beyond the mere presentation and validity of the Promissory Note. In any event, no monies have since been paid on the Promissory Note by any of the defendants.
[42] While there are multifaceted and intertwined commercial relations between the parties and other related parties, this particular transaction does not give rise to any cogent reason to accept the defendants’ submissions about collateral areas of dispute and contradictions.
[43] I am convinced that the Note is valid and can simply be categorized and acted upon as the plaintiffs suggests. I am not persuaded by Mr. Turton’s submissions in the least, or the defendants’ evidence that purports to deny liability for the loan for various explanations.
[44] I find that these issues can be fairly assessed under rule 20.02, even without this court’s expanded fact-finding powers. However, for the sake of completeness, I will discuss the evidence adduced by the defendants.
[45] Overall, there are significant credibility issues with the defendants’ affidavit evidence filed in support of their position. There is also a dearth of relevant records to substantiate the assertions made by the defendants.
Cardillo’s Credibility:
[46] As the evidentiary record demonstrates, I agree with the plaintiffs that Cardillo has no credibility. He has changed his position and evidence numerous times since the commencement of this action.
[47] In response to summary judgment, Cardillo initially took the position in his affidavit of July 23, 2018 that the Promissory Note was a “concoction” and apparently calling into question the authenticity of the signatures thereon.
[48] Consequently, the plaintiffs hired a forensic examiner to sustain the validity of the note confirming with near certainty that all of the signatures on the Promissory Note were Cardillo’s signature.
[49] The plaintiffs’ Reply Record also contained various email exchanges between Scott and Cardillo, confirming that Cardillo had actually emailed the Promissory Note to Scott on March 4, 2016.
[50] Additionally, during the Mortgage Action Cross-Examination, Cardillo was referred to the Promissory Note and confirmed that the $250,000 advance was provided. He seemed fully aware of the existence of and the purpose of the Promissory Note at that time. In fact, the Promissory Note was referred to numerous times during Cardillo’s June 15, 2017 cross-examination.
[51] Despite this, in his July 23, 2018 affidavit, just over one year after the Mortgage Action Cross-Examination, Cardillo changed his view, claiming then that the Promissory Note “did not seem familiar” and that it appears to be a “concoction”. On September 10, 2019, during the Cardillo Cross-Examination, he changed his position again, now recalling the existence of the Promissory Note and even recalling the meeting with Scott at Starbucks to sign the note.
[52] Cardillo’s unbelievable explanation was conveyed by his counsel who advised that: “the copy that was provided originally is an extremely bad copy… perhaps you might want to ask about what Mr. Cardillo’s view on the document currently having had the assistance of a better copy from your client, plus the assistance with certain emails”.
[53] This explanation, however, is not persuasive, in light of the fact that the Promissory Note was provided or shown to Cardillo and/or his counsel on three different occasions after the commencement of this action and prior to September 10, 2019.
[54] Cardillo’s credibility on other matters is also doubtful. For instance, he does not recall who acted as counsel to deal with the assignment of the Sun Life Mortgage to 250. He has refused to provide a trust ledger for the transaction relating to the assignment of the Sun Life First Mortgage.[^1] He claims that he is “not sure” whether the $43,210 advance was an agreement with Anne even though, among other things, the Promissory Note expressly indicates this fact.
Reichert’s Credibility:
[55] Reichert’s cross-examination also raised serious questions about this individual’s credibility. He clearly is not an arms-length party to Cardillo. Nonetheless, Reichert’s answers were often evasive and non-responsive.
[56] First, when asked in cross-examination whether Reichert knew Cardillo’s niece, Ms. Catenacci, he claimed that he did not. However, according to a corporate profile report, both he and Catenacci are currently directors of the entity known as Body Pro Gym, having its registered office at the Upper Wentworth Property. When presented with this corporate profile report, Reichert refused to answer any further questions on this point.
[57] Reichert is unable say how much was paid to Sun Life for the assignment of the mortgage. In fact, he was unable to even approximate this sum. Reichert also cannot confirm that he provided instructions to incorporate 250 and was unable or refused to say who did in fact provide such instructions.
[58] Reichert cannot recall how he became aware of the Sun Life Mortgage nor did he know whether the Sun Life Mortgage was in default at the time that 250 took an assignment thereof. Reichert does not know if 250 had a lawyer on the assignment transaction; he refused to confirm whether 250 even consulted with a lawyer on the assignment transaction; and refused to confirm whether any monies were paid to Ms. Tabuchi by 250 in connection with the assignment.
[59] Reichert has “no idea” whether the $250,000 sum advanced by Physiomed was used towards payment of the Sun Life Mortgage. Reichert cannot say whether 250, on its own, came up with any of the money to pay the Sun Life Mortgage, and refused to check his records to confirm same. He also refused to answer whether Cardillo/Medcap came up with money to pay the Sun Life Mortgage and refuses to answer whether Cardillo has an unregistered interest in the Sun Life First Mortgage. Reichert also cannot recall whether 250 was lent the $250,000 that was advanced from Physiomed.
[60] Astonishingly, Reichert claims that he is not even aware that Cardillo signed the Promissory Note on behalf of 250. Given the nature of the claims made and the sums claimed against 250 in this action, Reichert seems either oblique or willfully blind to Cardillo’s conduct, and particularly, as it relates to Cardillo signing the Promissory Note and its potential impact on 250.
[61] Reichert did not challenge Scott’s evidence that 250 has not collected a single mortgage payment from Medcap despite having a first mortgage against the Upper Wentworth Property. Instead, he refused to answer whether any payments under 250’s mortgage have been made by Medcap; whether there are any agreements between 250 and Medcap; whether he was aware that there are in excess of $681,501 in accruing property tax arrears on the Upper Wentworth Property; and how much remains owing under 250’s mortgage.
[62] I accept that the transcript from the Reichert Cross-Examination demonstrates that the examination is replete with improper refusals, obstructive conduct of counsel for the defendants, with many or most of the substantive answers being given by counsel, not the witness.
The Defences/Counterclaim is barred by the Limitations Act:
[63] Leaving aside the defendants’ allegations that Cardillo did not sign the Promissory Note or that he did not have authority to sign on behalf of 250, (which both are without merit), the balance of Medcap’s defence, (as also alleged in the Mortgage Action), is that Medcap and Physiomed have an ongoing running account of mutual debts that must be accounted for. Before the Promissory Note debt can be collected by the plaintiffs, the defendants assert, inter alia, that the plaintiff must first perform this exhaustive accounting.
[64] An examination of the so-called debts, as alleged to be accounted demonstrate that these claims/defences are prima facie frivolous, unsupported by evidence, and is also barred pursuant to the Limitations Act, 2002, S.O. 2002, C.24, Schedule B.
[65] The claims made by Medcap, by way of counterclaim, date back several years in some instances. However, the sequence of events in this action and the Mortgage Action demonstrate that the counterclaims are out of time. The Statement of Claim in this action was commenced on January 24, 2017. Cardillo was aware of the action by no later than March 2, 2017. On April 24, 2017, Medcap and Cardillo filed their Statement of Defence and Counterclaim in the Mortgage Action.
[66] The counterclaim in the Mortgage Action is identical or essentially identical to the counterclaim in this matter. However, the Counterclaim, in this action, was not commenced until April 16, 2019. Given the nature of the Counterclaim/Defence – ongoing accounting/set-off – it would have been obvious to Medcap that its claim of set-off of mutual debts or damages would have to be asserted once Physiomed made a claim for collection of a debt from Medcap.
[67] Cardillo’s affidavit of July 23, 2018 admits to being aware of this action by March 2, 2017. Therefore, as principal of Medcap, the defendants would have known that a counterclaim of set-off of mutual debts/damages arose in connection with the sums being claimed by Physiomed in March 2017.
The Defences/Counterclaim:
[68] While Medcap’s claims are framed or described as a set-off of mutual debts/damages, a closer examination of the debts claimed demonstrates that they do not in fact constitute either a legal or equitable set-off.
[69] More properly described, they constitute unrelated damage claims, not equitable set-off. To constitute an equitable set-off, the claim being asserted must go to the very root of the plaintiffs’ claim or the transactions at issue. Courts have refused to apply equitable set-off to unrelated claims: Poss Design Limited v. Beogard Machine & Tools Co., 2014 ONSC 3051, at para. 20.
[70] A description of the claims for set-off made by Medcap can be summarized as follows: 1) Physiomed was to purchase and/or operate Premier Fitness clubs (which were owned by Cardillo), which breach occurred in 2012, resulting in damages; 2) A payment made by Medcap to Equirex Leasing Company in November 2014, for the alleged benefit of Scott, which it now seeks a credit for; 3) An alleged agreement that Scott would pay off the Sun Life Mortgage, if Sun Life would not agree to renew it, and due to Scott’s failure to pay of the Sun Life Mortgage, Medcap suffered damages; and 4) Alleged unpaid rents by Physiomed at facilities wherein Physiomed related entities subleased space from Medcap from the periods of March 2012 to December 2016.
[71] I agree with the plaintiffs that none of the foregoing claims can be described as going to the “very root” of the monetary advances claimed in this action. Moreover, an examination of these claims demonstrates that they are frivolous and not grounded in fact or evidence.
The Claim that Physiomed was to Purchase and/or Operate the Premier Fitness Clubs:
[72] I find that on this record, this is a bald allegation unsupported by any evidence whatsoever. In fact, Cardillo has not tendered a single email or document to corroborate this allegation. Paragraphs 19 through 21 of the Cardillo Affidavit do not contain a single exhibit, notwithstanding the extensive discussion about the alleged damages suffered. By Cardillo’s own admission, the alleged breach occurred in February 2012.
The Alleged Payment made to Equirex Leasing by Cardillo for Scott Wilson’s Benefit:
[73] Cardillo admits in the Mortgage Action Cross-Examination that Equirex Leasing did not provide Scott and/or Physiomed with a credit for this payment. This payment related to a Medcap/Cardillo debt, not a debt related to Scott or Physiomed. Furthermore, this payment occurred on November 20, 2014, approximately 4.5 years before the counterclaim was commenced.
The Alleged Agreement by Scott Wilson to Pay the Sun Life Mortgage:
[74] Cardillo’s evidence is that Scott Wilson agreed to pay the Sun Life Mortgage, in the event that Sun Life agreed to renew it.
[75] First, the Sun Life Mortgage did not mature, and therefore, was not subject to renewal. It was in default as of January 2016. In any event, I accept Physiomed’s denial that it agreed to pay the Sun Life First Mortgage. Again, there is no evidence whatsoever that such an agreement existed. I agree with the plaintiffs that if such a promise was made by Scott then it would be merely a promise made without return consideration, and therefore, unenforceable at law.
[76] Moreover, this alleged breach would have occurred on or before the Sun Life Mortgage was assigned to 250 on March 8, 2016, over two years before the counterclaim was commenced.
[77] Most significantly, Cardillo has not produced any evidence of the damages incurred, including the legal fees which he claims to be as high as $400,000, and which he later revises down to $150,000. No documentation providing support to these alleged damages (not even proof of payment for the alleged legal fees incurred) has been included in the defendants’ evidence.
Alleged Unpaid Rents owed to Medcap by Physiomed:
[78] Again, aside from bald allegations, no evidence has been tendered by Medcap to properly corroborate this allegation. The evidentiary record is devoid of any specifics concerning which tenants owed any rents to Medcap nor is there a single demand for payment included in the record from Medcap to Physiomed for these alleged unpaid rents.
[79] Cardillo’s evidence is that the Physiomed clinics were tenants from March 2012 to December 2016. Therefore, the last period of default would have occurred in December 2016, rendering the alleged default to have occurred in either December 2016 or January 2017. Hence, these unrelated and unsupported claims are barred by the Limitations Act.
[80] As an aside, in the companion action, (referred to by counsel during this motion), Mr. Proctor’s evidence as to the rents, alleged defaults with the amounts owing by Physiomed in favour of Medcap is neither credible nor reliable.
[81] The transaction at issue, being the Promissory Note (or the advances), is completely distinct from the defence/counterclaim of Medcap. Therefore, it would be appropriate to grant judgment irrespective of whether the counterclaim of Medcap is dismissed and/or has any chance of success. There is no factual overlap or logical connection between the Promissory Note and the defence/counterclaim that could lead to inconsistent findings. Moreover, the Promissory Note is not subject to a defence of set-off pursuant to the Bills of Exchange Act: Iraco Ltd. v. Staiman Steel Ltd., 1987 4072 (ON CA), [1987] O.J. NO. 233, 45 D.L.R. (4th) 158, 62 O.R. (2d) 129.
[82] I observe that the counterclaim (and the alleged defence of set-off/accounting is only being asserted by Medcap against Physiomed. Even if Medcap were able to persuade me that this Promissory Note or the advances ought to be captured and accounted for by the system of set-off, this would still have no impact on the liability of 250 or the monies owing to Anne by Medcap. In any event, I am not persuaded by the defendants’ attempt to interpret the language with parol evidence and submissions regarding Physiomed’s alleged liability to Medcap.
[83] As confirmed by Ontario Court of Appeal in Rescon Financial Corporation v. New Era Development Inc., 2018 ONSC 259, aff’d 2018 ONCA 530, when there is clear overlap of a defence and counterclaim, the court has the ability to dismiss the counterclaim, even if such a dismissal is not requested in the plaintiff’s notice of motion.
[84] Here, I find that the Statement of Defence and Counterclaim are overlapping and essentially the same. As such, determining that there is no issue for trial leads to a rejection and dismissal of the counterclaim. The defences/counterclaims are without merit, consisting of bald allegations, and are, in any event, barred pursuant to the Limitations Act.
[85] I agree with the plaintiffs that both defendants seek to escape liability through defences/positions shrouded in ambiguity, confusion, technicalities, and falsities. Therefore, at the very least, Physiomed should have judgment against 250 for the principal sum of $250,000, and Anne should have judgment against Medcap for the principal sum of $43,210. To reiterate, 250 cannot claim set-off because it is not part of the alleged factual nexus requiring a broader accounting of all debts. Anne also has no factual connection with this system of setting off mutual debts, and therefore, there is no viable legal basis for refusing to repay the sums that she lent to Medcap.
[86] It is not, as the defendant suggests, an exercise where the plaintiff has to provide an accounting before I can properly determine the facts in this case.
[87] I agree with the plaintiffs that I am able to determine all issues without the need for a trial and grant the relief sought by the plaintiffs while dismissing the counterclaim. The primary defence and counterclaim of the defendants are essentially the same. I accept the argument that granting judgment in this manner would have no bearing whatsoever on any motion or trial as between Physiomed and Medcap. Granting judgment in accordance with the foregoing cannot lead to subsequent inconsistent findings at trial given the clear severability and distinction of the issues and the parties.
[88] I observe that in the case of The Bank of Nova Scotia v. 1736233 Ontario Limited, 2018 ONSC 4449, at para. 27, (rendered after Butera v. Chown, Cairns LLP, 2017 ONCA 783), partial summary judgment was granted to a plaintiff in relation to 16 specific loan transactions. In arriving at its decision, the court took note of the fact that the specific loans which were subject of the motion were all in default, and specifically noted that there was no risk of inconsistent findings at trial. The overall transactions and dealings between the parties in 1736233 had a much closer connection to the transactions at issue in this case. In 1736233, the judge concluded that adjudicating on the motion for partial summary judgment was nonetheless consistent with the principles set out in Butera.
[89] In light of the foregoing, the Promissory Note is enforceable against Medcap either as a promissory note, as defined by the Bills of Exchange Act, or simply by way of it being an enforceable loan agreement. Even if it can be reasonably argued that the Promissory Note fails to constitute a valid bill of exchange or a loan agreement, it is still clear evidence of an acknowledged debt with agreed upon terms of repayment and interest.
[90] A similar issue was addressed in Sniderman v. Gibbs, 2004 CarswellOnt 4271, at paras. 35 – 36; wherein a defendant sought to escape liability under a loan agreement or promissory note, by arguing that the debt instrument did not meet the technical requirements under the Bills of Exchange Act. In rejecting this defence, the court pointed out that the agreement itself constituted a promise to pay a sum of money along with interest and costs, irrespective of whether such an instrument met the technical definition of promissory note.
[91] Hence, apart from being a promissory note, within the meaning of the Bills of Exchange Act, the Promissory Note is also a loan agreement containing a promise to pay from Medcap on the basis set out therein.
Unjust Enrichment:
[92] If I am in error in concluding that Medcap is liable to under the terms of the Promissory Note, then I find in favour of the plaintiffs on the basis of unjust enrichment. This type of scenario falls directly within the direct ambit of the remedy of unjust enrichment, which is available when: a) The defendant has received an enrichment or benefit; b) The plaintiff has incurred a corresponding deprivation; and c) There is an absence of juristic reason for the enrichment.
[93] In this action, all elements of unjust enrichment are made out. Dealing with the $43,210 amount and the subsequent $293,210 advance, I have no doubt whatsoever that Cardillo signed the Promissory Note on behalf of Medcap. There is also no dispute that the Promissory Note expressly requires Medcap to repay these sums. Moving forward, there is no doubt that the funds were received and benefited Medcap.
[94] 250 received the sum of $250,000 from Physiomed. Any attempt by the defendants to later resile from this position is rejected. The second element is made out because the corresponding deprivation is the advance given by Physiomed and subsequent assignment for the benefit or use of both Medcap and 250. Finally, accepting the defendants’ position that 250 is not a party to the Promissory Note (or not liable thereunder), then there would be no juristic reason for it to retain the enrichment of the $250,000 with no obligation to pay back this sum to Physiomed. 250 also cannot escape liability for the sums that it received.
[95] In any event, if the advance(s) given are not subject to any agreements containing specific terms, they would still constitute a demand obligation payable upon demand: Azman v. Viola, 2010 ONSC 6455, at para 44; and BDC v. Almadi, 2015 ONSC 6912, at para. 27.
Conclusion:
[96] In summary, the plaintiffs have met their onus and have satisfied me that there is no genuine issue requiring a trial.
[97] The defendants’ cannot defeat judgment with their parol evidence, including the lack of cogent supporting evidence, inconsistent versions about matters that are both material and immaterial to the issues; along with transactions that are suspect at best and claims that are nothing more than bald assertions. All of the defences and counterclaims are statute barred, or in any event, lack an air of reality.
[98] There is no doubt that both Medcap and 250 received the benefit of the sums of money advanced to these entities from the plaintiffs. In taking the defendants’ position at its highest and accepting for the moment that the terms of the Promissory Note might not apply based on the submissions of plaintiffs’ counsel; under the doctrine of unjust enrichment, both defendants are liable for the advanced sum of $250,000, and Medcap is also specifically liable for the sum of $43,210. There is no juristic reason in law for 250 to retain the benefit of the advance without repayment to Physiomed.
[99] The plaintiffs’ motion for summary judgment is granted with costs. The counterclaim is dismissed.
[100] An order is made as against Medcap for the sum of $293,210 in favour of the plaintiffs, as pleaded. Further, an order is made as against 250 for the sum of $250,000 for which it ought to be jointly and severally liable along with Medcap.
Costs:
[101] If the parties cannot agree on costs, the plaintiffs shall file their submissions within 15 days of the release of this ruling. The defendants shall file its response within 15 days of receipt of the plaintiffs’ submissions. The plaintiffs may file a brief reply within 10 days thereafter. These submissions shall not exceed three pages in length (not including Bills of Costs or Offers to Settle).
A.J. Goodman J.
Released: March 30, 2021
COURT FILE NO.: 19-68169 DATE: 2021-03-30
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
PHYSIOMED HEALTH HOLDINGS INC. and ANNE WILSON Plaintiffs
- and –
MEDCAP REAL ESTATE HOLDINGS INC and 2503866 ONTARIO INC. Defendants
REASONS FOR JUDGMENT
A.J. Goodman J.
Released: March 30, 2021
[^1]: I am also persuaded by Mr. Allan that many of the refusals provided by defendants’ counsel were improper and prevented the plaintiffs from a full discovery and examination.