COURT FILE NO.: CV-19-0000617-0000
DATE: 2021/01/19
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Cliff Oliver and Easy Loans Canada Inc.
Plaintiffs/Moving Parties
– and –
Mark Herod Mardyl Express Transport Inc.
Defendants/Responding Parties
Aaron Rousseau, for the Plaintiffs/Moving Parties
Michael A. van Bodegom, for the Defendant/Responding Parties
HEARD: August 8, 2020
THE HONOURABLE MR. JUSTICE R. J. HARPER
Issues
[1] Whether the Moving Parties (Oliver/ELC) should be granted summary judgment against the Responding Party (Herod/MET)
Background
[2] Cliff Oliver owns and operates a company called Easy Loans Canada Inc. (ELC). ELC is a company incorporated under the laws of the Province of British Columbia. Oliver is the sole shareholder in ELC and the nature of the business is make small loans to individuals. He stated that at the time of his swearing his affidavit on the 9th of October 2019 he had approximately 1,000 loans outstanding that totalled approximately $350,000.
[3] Mark Herod is the owner and operator of Mardyl Express Transportation Service Inc. This is a company incorporated under the laws of the Province of Ontario.
[4] From in or around 2013, Oliver/ELC provided Herod/MET with multiple sums of money at different times from 2013 to approximately the end of 2018.
Position of Oliver/ELC
[5] According to Oliver/ELC there were 5 loans made to Herod/MET made from 2013 to November 2018. The were loans detailed in the Plaintiffs’ evidence as follows:
a. 2013 – 2016 Van Titles Loans There were four separate loans that were eventually consolidated in July 2016 to one loan.
Each of these loans were evidenced by loan agreements that set out the interest rate and the payments that were due monthly. The consolidated loan agreement is dated July 25, 2016. This agreement stated that the interest rate annually was 33%. Herod/Met made payments in accordance with the terms of the Can Title Loan from August to December 2017. There were no payments made subsequent to December 2017.
b. May 2017 Loan
Oliver/ELC loaned Herod/MET an additional $10,500 on May 18, 2017. This loan is evidenced by a promissory note. It was to the Defendants’ company and in Mark’s personal capacity. The annual interest rate stipulated in the promissory note was 48%. Mark made payments on this loan from June 2017 to December 2017.
c. November 2017 Car Loan
Herod/MET took a loan from Oliver/ELC in the amount of $10,000. It was later agreed that this loan would bear interest at 4% per month which would apply commencing January 1, 2018.
d. Tuition Loan
In May 2018, Herod took a loan from Oliver/ELC in the amount of $3,000 to pay for his son’s tuition. There was no agreed interest rate. Oliver/ELC contends that the amount owing is $3,200
e. The Money Advanced for the Joint Business Venture
Between June and November 2018, Oliver/ELC alleges that he provided a series of loans to Herod/MET. Oliver/ELC claims that the loans were for a trucking business that Herod/MET entered. Initially this business was to be a joint venture, however, Herod/MET refused to follow through with the joint venture and treated all monies advanced to him as loans.
In any event, the moving party argues that if the Court finds that it was a joint venture, the money advanced by Oliver/ELC was to be paid back with interest. The amount outstanding for these loans totals $21,875.
[6] Oliver/ELC alleges that the loans are all due and interest remains accruing.
[7] All sums of money provided by Oliver/ELC are evidenced by various forms of loan documentation attached as exhibits to the affidavit of Cliff Oliver dated October 9, 2019.
Position of the Herod/MET
[8] The Defendant takes the position that he signed a series of documents between 2013 and 2018 that he did not understand. He submits that he thought that the documents outlined a business relationship with the plaintiff by which they had entered into a joint venture. He denies that monies advanced to him over the time period set out above were loans. He claims that Oliver/ELC were equity partners in this business relationship.
[9] The Defendant also claims non est factum. This will be dealt with later in these reasons.
[10] The Defendant claims that the “Van Loan” is invalid since the interest rate charged amounts to a criminal interest rate of 60%.
The Law and Analysis
Is the Case Appropriate for a Summary Judgment?
[11] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that the court shall grant summary judgment if: “the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.” With amendments to Rule 20 introduced in 2010, the powers of the court to grant summary judgment have been enhanced. Rule 20.04 (2.1) states:
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.
[12] In Zaky v. 2285771 Ontario Inc., 2020 ONSC 4380, Conlan, J. reviewed the principles to guide the court when considering summary judgments. I agree with his review that commences at para.13:
[13] The following principles may be gleaned from a careful review of the leading decision of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7.
[14] First, it is the principle of proportionality that ought to drive the Court’s decision on a request for summary judgment. There will be no genuine issue requiring a trial when the judge hearing the motion is able to reach a fair and just determination on the merits.
[15] Second, what does that mean – a fair and just determination on the merits? It means (i) that the judge hearing the motion is able to make the necessary findings of fact, (ii) is able to apply the law to the facts, and (iii) the process employed to do those things is a proportionate, more expeditious and less expensive means to achieve a just result (as compared to a trial).
[16] The judge must be able to have confidence in the conclusions reached on the motion, otherwise, the case ought to proceed to trial.
[17] Third, the judge hearing the motion should follow a two-stage procedure. Initially, consider only the evidence filed without regard to the expanded powers. Then, afterwards, if there appears to be a genuine issue requiring a trial, the judge may (but does not have to) weigh the evidence, evaluate credibility and draw reasonable inferences.
[18] Fourth, there is certainly a culture shift that was signalled by the decision of the Supreme Court of Canada referred to above. The Courts have been encouraged to, wherever possible, deal with matters expeditiously. Cases should proceed to trial only if they really have to. The summary judgment process can, where employed properly, increase access to affordable and timely justice. A trial should no longer be viewed as the default procedure.
[13] Hryniak v. Mauldin does not alter the principle that the court will assume that the parties have placed before it, in some form, all the evidence that will be available for trial. The court is entitled to assume that the parties have advanced their best case and that the record contains all the evidence that the parties will present at trial.
Parties Putting Their Best Foot Forward
[14] Counsel for Herod/MET submits that this summary judgment motion is premature. He argues that discoveries have not taken place nor has there been any cross-examination on the affidavits filed in support of the motion or responding to the motion.
[15] Counsel for Herod/MET conceded, however, that the responding party did not seek an adjournment in order to allow for such procedures to be completed prior to proceeding with this motion for summary judgment. In fact, such a request was never made of the other party. It must be emphasised that courts are allowed to assume that once the motion is before the court without any request for an adjournment, the court is entitled to assume that each party has put their best foot forward and presented all of the evidence that may support their case unless a request is made for an adjournment in order to obtained further evidence or test existing evidence.
[16] It is not proper to hear the moving party’s argument and then submit that a further and better record created by allowing for discoveries and cross-examinations. I find that I can make the all the material findings necessary on the record that has been filed to date with respect to all the loans between the parties up to the monies advanced for the alleged “joint business venture”.
Non Est Factum
[17] Herod/MET claims that between 2013 and 2017 he signed several documents that purported to be loan agreements with Oliver/ELC. He submits that he did not have independent legal advice when he signed any of the agreements and that he did not fully understand the nature of the documents. He further claims that he thought that the documents outlined a business relationship with Oliver/ELC that was like a joint venture and that Oliver/ELC would only revive repayments of money that he advanced to him if the business showed a profit.
[18] I have reviewed the documents that were signed by both parties during that period. The documents are not complex nor is there any ambiguity on the face of any of the documents. The documents that were signed during the period of 2013 to 2017 were all written evidence of loans entered by the parties.
[19] Herod submits that the last consolidation loan is not valid as it provides for an interest rate that infringes the Criminal Code of Canada section 347.
[20] In Transport North American, the Court considered the remedies available where parties had signed a contract that provided for the payment of a criminal rate of interest. The question was not whether the clause that provided for the payment of this rate of interest was illegal, but rather whether this led to the failure of the contract as whole. As the Court noted, it is trite law that, where a contract provides for something that is forbidden by statute, “no court will lend its assistance to give it effect”: Cope v. Rowlands (1836), 2 M. & W. 149, 150 E.R. 707 (Eng. Exch.), at p. 710.
[21] Was the interest rate set out in the consolidated “Van Title Loan” 60% or higher in contravention of Section 347 of the Criminal Code of Canada? Considering the totality of the evidence I find that the interest rate charged on this loan was not an infringement of Section 347 of the Criminal Code of Canada.
[22] I accept the submissions of the moving party with respect to the Interest rates that were set on the various loans, except for the Tuition Loan, as follows:
a. Van Title Loan carries the interest rate of 33% per annum;
b. The May 2017 Loan carries the interest rate of 48% per annum;
c. The November Car Laon carries interest rate of 48% per annum
d. The Tuition Loan did not set out any interest rate and it shall only be subject to post judgment interest.
The Law and Analysis of the Claim of Non Est Factum
[23] I agree with Justice Perrell in Royal Bank of Canada v. 2240094 Ontario Inc., 2013 ONSC 2947, Justice Perrell at paragraph 13 in his outline of the law relative to the defence of non est factum:
[13] The defence of non est factum may be available when a person has been misled into signing a contract that is fundamentally different from what he or she thought was being signed. To succeed on the defence, the person must establish that: (1) the contract is fundamentally different from that which the person intended to sign; (2) the person did not consent to the contract as such; and (3) he or she did not sign the contract due to carelessness: Saunders v. Anglia Building Society, [1970] 3 All E.R. 961 (H.L.), Marvco Color Research Ltd. v. Harris (1982), 1982 63 (SCC), 141 D.L.R. (3d) 577 (S.C.C.).
[24] I find that up to November 12, all the contracts entered by the parties were exactly what they intended them to be. They were loans that had repayment terms with interest that was specified.
[25] I find that the Defendants claim of non est factum is without any merit.
[26] I find that the claim that the Van Loan set an interest rate that was less than the criminal interest rate. Although there was evidence that the Plaintiff sent an email suggesting a higher criminal interest rate, this was never agreed to nor was it acted upon by both parties.
[27] With respect to all of the loans prior to November 12, 2017, I find that there is no genuine issue that requires a trial. Summary Judgment is granted relative to these loans.
[28] An order shall go as follows that the defendants pay the following amounts for breach of contract:
a. For the Van Title Loans, the defendants shall pay the sum of $11,934.00 plus interest at 33% from January 1, 2018 and post judgment interest at the rate set out in the Courts of Justice Act;
b. For the May 2017 Loan, the Defendants shall pay the sum of $10,414.00 with interest to date of judgement at 48% per annum commencing January 1, 2018 and at the post judgment rate as set out in (a) above noted thereafter;
c. For the 2017 car Loan, Mark Herod shall pay to Cliff Oliver the sum of $10,000.00 with interest from January 1, 2018 to the date of judgment and post judgment interest thereafter as set out in (a) above noted;
d. For the Tuition Loan, Mark Herod shall pay the sum of $3,000.00 with post judgment interest as set out in (a) above noted.
Agreements from November 12, 2017
[29] Herod stated at paragraph 5 of his affidavit that he and Oliver entered into a series of joint venture agreements in November of 2017.
[30] On November 12, 2017, the parties entered into a different arrangement from the pattern of multiple loan agreements from 2013. On November 12, 2017, there was the start of an email stream between Herod and Oliver that I find to be substantial evidence of a transformation from a lender/borrower relationship to a business relationship that took on elements of a joint business venture.
[31] This joint venture business relationship started with a business that related to the purchase, repair and resale of used vehicles. The business was expanded to what I find to be in the nature of transportation and trucking.
The Transport Business Venture
[32] I find that the documentary evidence filed by both parties establishes only that there were ongoing and fluid discussions between Oliver and Herod about there future business relationship. I find that the parties were in discussions from that point on that outlined a relationship whereby Oliver would advance funds to Herod for the purchase of used vehicles. Herod would repair and resell the vehicles in order to make a profit that would allow for Oliver to get a return of the finds that he advanced and there was never any agreement on what the ratio of profit sharing would be and there were discussions about Oliver getting a guarantee from Herod that would allow him to be repaid the funds he was advanced.
[33] In an email from Oliver to Herod on November 22, 2017, Oliver stated:
In order to protect my investment, I would place a lien on the vehicle which would be released when we are read to sell it. A lot of trust would be placed in you to make good on my investment. because I am not there. If you do not buy a vehicle. For whatever reason, would you return the funds immediately? How often are these auctions held? Have you seen the vehicle you want? You must do a lien search before paying for the vehicle. It has to be free and clear. I would assume you do an accident report on the web as well. If the vehicle turns out to be a lemon. or needs much more work/money than you originally felt and we can't sell it to recover all input monies fully, Will you guarantee my principal that you would pay me back any shortage? I do not want to invest in anything where a loss is possible.
[34] On November 23, 2017, Herod replies, in part, to the questions asked by Oliver in his email of November 22. However, he did not answer many of the questions posed by Oliver.
[35] On November 23, 2017, Herod emailed Oliver asking him why he did not respond to his email of November 23. Oliver replied he did not respond because Herod did not answer his questions in his email of November 22, 2017.
[36] There is insufficient evidence to allow me to determine the exact nature of the contractual relationship that existed between the parties from November 12, 2017.
[37] With respect to all the business dealings between he parties relative to the car repair and transportation business they entered into, there are genuine issues that require a trial and cannot be resolved on the record before me even if I were to exercise any stage two considerations. The record is simply too uncertain.
[38] As a result, the Plaintiff’s claim for Summary Judgment relative to all of these joint business ventures must go to trial.
[39] The parties shall contact the Trial Coordinator to arrange for a trial scheduling meeting.
[40] If costs are not agreed to, written submissions may be filed within 30 days
Harper, J., SCJ
Released: January 19, 2021