ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HEDIA BOOJI also known as LINDA BOUJI
Plaintiff
– and –
KARRUNAWATTI POONAI also known as KAY POONAI
Defendant
Madeleine Dusseault, for the Plaintiff
Eugene J. Bhattacharya, for the Defendant
HEARD: January 28, 2020
FL Myers J
REASONS FOR JUDGMENT
The Motion
1The plaintiff moves for summary judgment to enforce a liquidated debt of $200,000 due under a promissory note. Despite the very cogent submissions of Mr. Bhattacharya for the defendant, for the reasons that follow, I find for the plaintiff and grant judgment accordingly.
The Undisputed Background Facts
2The parties met in 2016 to discuss business opportunities. The plaintiff had previously been a client of the defendant when she sold insurance many years earlier.
3The defendant introduced the plaintiff to an opportunity to invest funds in a project controlled by Pannirshelvan Kannuthurai. It turns out that his project, Metrozen Canada, was another in a long line of syndicated mortgage frauds that have plagued Ontario investors for a number of years.
4The defendant admits that she was promised 13% commission from Metrozen for this transaction.
5The defendant sought an investment of $400,000 by the plaintiff. Kannuthurai had told the defendant (and then the plaintiff) that Metrozen needed the funds to pay off a mortgage that was in default and to help carry the mortgage in the future.
6The plaintiff told the defendant that she was willing to invest $200,000 as the defendant recommended provided that the defendant put up the other $200,000. As the defendant did not have that amount on hand, the plaintiff offered to advance it on her behalf. The defendant agreed.
7The “deal” with Kannuthurai or Metrozen was that for their investment, the parties were to receive 10% of the shares of the project company and the remaining shares held by Kannuthurai or one of his companies were to be pledged as security for the repayment of the $400,000 in six months.
8The plaintiff and defendant agreed that they would split the shares 70/30 with the plaintiff receiving the lion’s share because she was putting up the funds for the defendant.
9On May 31, 2016, the parties went together to the plaintiff’s bank and to Metrozen’s lawyer’s office to arrange for and make the advance to Metrozen.
10Unfortunately, the money was misappropriated by Kannuthurai or Metrozen. It never went into the project and neither party has received any shares nor a penny in return.
The Contemporaneous Documentary Evidence
11To document the deal between them, the parties signed a promissory note on August 31, 20216. It reads in part:
For value received I, Karrunawatti Poonai, of 39 Eaglesprings (sic) Crescent Brampton, in the Province of Ontario, Canada, promise to pay Hedia BOUJI, located at 29 Cynthia Crescent, in the City of Brampton, in the Province of Ontario, the sum of $200,000.
This amount was loaned to me by Hedia Bouji on May 31, 2016 to purchase 3% shares of metro ZEN for the project located at 189-195 Milner Avenue, Scarborough, Ontario.
Should I default in my payment, Hedia Bouji can put a lien on any one of my properties as she may see fit.
I am confirming payment of all charges on this loan such as interest payment, legal fees and others.
This Promissory Note is also secured by a Personal Guarantee, dated August 30, 2016 and attached herewith. This Note is to be governed by and will be construed in accordance with the laws of the province of Ontario and the laws of Canada applicable therein.
12The note and the related guarantee document were signed by the parties before a notary.
13Thereafter, the defendant paid interest to the plaintiff of $600 per month.
14In April, 2018, the plaintiff asked the defendant to pay the $200,000. The defendant did not repay the principal but she continued to pay interest until September of that year.
15I attach the following chart from the plaintiff’s factum that contains portions of text messages that the defendant admits she sent to the plaintiff from 2016 to 2018:
Excerpt of Text from Defendant Referencing Debt Owing
“…will worry about the 400 and my 200…If and when I expired I carry nothing so I will make sure I return your 200 shortly…”
“…The 200 I want to know if as a long time trust worthy client and now a known and helpful associate, would you be interested to hold air own one or two acres on my airport land at 500 per acre…I can be peaceful with 1million, 200 for you…”
“…Can you please send the cheque that was sent to the lawyer for Metrozen…I will attach the promissory note and confirm that we in vested 200 k each.”
“…Today I made a report to the police to investigate Shelvan and Metro Zen, I told when and how I got involve and about the 50 k and the 400k that was contributed by you and I was responsible for (sic) 50%. 200K.”
“…We had coffee a few months ago and I promise you that by this year end I will clear your account of the $200,000 (sic) you sent to Shelvan’s Lawyer Mr. Robert…”
“…I have appointment for my body muscle scan, I am worried and need to resolve your 200 thousand debt before any operation.”
[Emphasis added]
16The person referred to as Shelvan is Kannuthurai of Metrozen.
17After the plaintiff went to a lawyer and the defendant stopped paying interest, the defendant sent emails to the plaintiff’s lawyer containing the following statements (which I have again copied from a chart in the plaintiff’s factum for convenience):
Date of Email
Email from Defendant Referencing Debt Owing
October 10, 2018
“About Linda, the amount Linda is requesting is incorrect, Linda knows it is 200 000 that she ask me to guarantee should her investment goes sour. I sent you a copy of Linda personal contact contract with Metrozen owner, Shelvan. Linda bargain for compensation for the. 6 months that the fund was required. 70% of the compensation for herself and 30% for myself.
A promissory note was done by Linda and myself to support the amount of the 200 thousand, I did forwarded a copy to you when you first advise me that Linda retained you against me.”
October 10, 2018
“If the amount she is claiming is the corrected amount of $200,000 then I have no problem to make the interest payment I was since inception to last month. Linda did agree with me at our last coffee that the payout will be dec, 31 2018 or earlier if I choose.”
August 26, 2019
“…The reason I signed a promissory note to pay the interest for 200,000 for 6 months was for Metrozen and the return was 9 to 10
% interest … I paid the interest to Linda for $200,000 until Linda said SHE DID NOT GIVE THE $400,000 TO METROZEN. THE PROMISSORY NOTE WAS FOR THE $400,000 TO BE MADE PAYABLE TO METROZEN AND LAWYER FLETCHER IN TRUST FOR THE FIRST MORTGAGEE INTEREST PAYMENT THAT WAS OVERDUE AND
ADVANCE TO SEPTEMBER OF 2016.”
[Emphasis added]
18By the time of the August 26, 2019 email directly above, the defendant was formulating her defence to the enforcement of the promissory note. In essence, she says that the plaintiff should not have advanced the funds to Metrozen’s lawyer but to the lawyer for Metrozen’s mortgagee. She also says that she should not be liable for her loan because she did not receive the shares promised by Metrozen.
19In a text message dated May 31, 2016, the plaintiff confirmed the terms of the parties’ investment with Kannuthurai. 2199032 Ontario Inc. is the corporate vehicle used by the plaintiff to advance the funds to Metrozen.The defendant is referred to in the text as “Kay”. The defendant was copied on this text message.
I have contacted Kay about the agreement and suggested that I get 7% and she gets the 3%.
She is OK with that.
We need to move forward right now
get the mortgage on Kay's property
You need to instruct your layer [sic] about:
use 100% of the shares as a garantee [sic] for the $400 deposit until repaid back (6 months)
offer kay 3% of the shares (based on appraised set at $10 million)
offer 2199032 ontario inc 7% of the shares (based on appraised set at 10 millions)
The rest of the terms are just identical to what you have drafted in the attached file
20The defendant relies on a document entitled “High-level Instruction to Mr. Robert Hall, QC” in which Kannuthurai instructed Metrozen’s counsel about the transaction. The defendant apparently did not receive a copy of this document. It says:
The above corporation will receive $400,000.00 from the following corporation:
2199032 Ontario Inc
Hedia Bouji, AKA as Linda Bouji
29 Cynthia Crescent. Brampton, ON L6P OS9
Security for the $400,000.00
And Metrozen (Canada) Inc will assign 7% of the common shares to 2199032 ontario inc.
And Assign 100% of the shares of the corporation as a security collateral for the $400K.
And Promissory Note outlining the terms of the above loan and other options the parties will consider.
The value of the land as of now is set at $10,000,000
The term on the investment is for 6-months and shares are vested immediately, thus the investor is not required to return the shares when the investment is paid out within 6- months.
21From this document, it appears that Kannuthurai was transferring 7% of his shares in Metrozen to plaintiff but nothing to the defendant.
22On May 31, 2016, when the plaintiff made the advance, Metrozen signed a promissory note in favour of the plaintiff’s company that had been prepared by Metrozen or its lawyer. It similarly made reference solely to the plaintiff’s 7% and purporterd to pledge all remaining shares of Metrozen owned by Kannuthurai or his company as security. Once again, it appears from this document that the defendant was not getting the 3% to which she had agreed.
23However, the defendant signed this promissory note as witness.
The Law
24This is a motion for summary judgment. The plaintiff bears the burden to establish that there is no serious issue requiring a trial.
25In accordance with the Supreme Court of Canada’s test set out in Hryniak v Mauldin, 2014 ONSC 7, there will be no genuine issue requiring a trial if the summary judgment process provides the court with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure under Rule 20.04(2)(a).
26If the evidentiary record alone is insufficient to conclude that there is no serious issue requiring a trial, the court will then consider whether the use of expanded powers in Rules 20.04 (2.1) and (2.2) is in the interests of justice. As described in Hryniak, the use of the expanded powers under Rules 20.04(2.1) and 20.04(2.2) will be in the interests of justice if doing so 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.
27The defendant notes that the decision of whether to utilize the expanded powers to draw inferences and to make credibility findings is discretionary. It is important to consider, in particular, whether the use of summary procedures is proportional as compared to a full trial.
28I accept the defendant’s submission in para. 51 of her factum that:
The standard for fairness in considering a motion for summary judgment is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that they can find the necessary facts and apply the relevant legal principles so as to resolve the substantive underlying dispute.
29I recognize that the burden is on the plaintiff to satisfy the court that there is no serious issue to requiring a trial. The defendant submits that there are several serious issues requiring a trial:
a. The failure of the plaintiff to ensure that the funds went to pay down Metrozen’s mortgage and that the defendant received her 3% of Metrozen’s shares amounted to a lack of or a failure of consideration for her promissory note;
b. The requirement that the loaned funds be used to pay down Metrozen’s mortgage and that the defendant received 3% of Metrozen’s shares were conditions of her obligation to repay set out in her promissory note;
c. The plaintiff made misrepresentations that entitle the defendant to rescind her promissory note. The principal representation that the defendant says the plaintiff made and that she relied upon was thet they were to be equal partners 50/50;
30The defendant argues that each of these issues is fact-laden and involves the court in making credibility findings that are not appropriate in a motion context.
31I disagree.
32Certainly, the parties could have retained counsel and ensured that their funds did not get advanced until Metrozen established that the funds were being used as intended and that the shares were provided as promised. It is relatively simple to conceive of escrowed closing terms to implement the deal diligently and carefully.
33But the plaintiff and the defendant both participated in all steps. They both saw the plaintiff assert the agreed upon terms. They both saw that Metrozen’s lawyer documented the deal differently. The defendant signed the promissory note containing Metrozen’s version of the terms as witness without protest. Both parties attended the plaintiff’s bank and at the lawyer’s office to make the advance. They both recognized the actual deal in their own promissory note three months later. The correspondence and paper trial leave no doubt. The parties knew the deal and did not care about how Metrozen recorded it.
34Neither party received the shares to which they were entitled. After three months, the plaintiff went to the defendant to have her formalize her indebtedness and they entered into her promissory note. By that time, the funds had long since been advanced. The purpose of the investment recited in the promissory note is just a recital. It could not have been intended to impose conditions to change events that happened in the past, over which neither party had control, and in which both parties had already participated knowingly.
35The consideration for the note was the plaintiff’s advance on the defendant’s behalf as she intended and in which she participated.
36Finally, the defendant’s evidence that she was to participate equally with the plaintiff is a bald oral statement unsupported by the contemporaneous evidence. The defendant received the text dated May 31, 2016 saying that she was to receive 3% compared to the plaintiff’s 7%. She signed the Metrozen promissory note. She then recited the 3% in her own promissory note. It is how she described the deal to the police. She cannot have relied on a representation that she was to receive 5% of the shares in face of her own loan document and statements.
37In my view, it is safe, fair and proportionate for me to make these findings on the existing documentary record. The parties have each put their best foot forward. There is no more evidence as to their dealings. While it is possible that Kannuthurai might have evidence of dealings between himself and the parties, it is unlikely that as the fraudster, he will be helpful or reliable. Metrozen’s lawyer Mr. Hall too can be expected to be a very reluctant witness.
38The action is worth only $200,000. Becoming engaged in disputes over privilege and battling reluctant and/or unreliable witnesses is not affordable. To that end, it is perfectly understandable that neither party sought to examine Kannuthurai or Mr. Hall under summons.
39In my view, the documents meet the plaintiff’s burden. The defendant does not raise a genuine issue requiring a trial by delivering self-serving affidavits containing bald allegations with no supporting material. Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, aff’d 2014 ONCA 878. I believe I can interpret the promissory note based simply on the timeline without making an express credibility finding. Similarly, the failure of consideration argument is a legal one. The misrepresentation/collateral agreement argument is directly contrary to the promissory note and the defendant’s many contemporaneous statements. There is no evidence apart from the baldest of oral statement alleged, to even raise a hint that the plaintiff promised the defendant 50/50 sharing or that the defendant relied on such a promise.
40Moreover, if I viewed it otherwise, the contemporaneous texts and emails from the defendant make the outcome clear and deprives her defences and evidence of credibility. She knew throughout, from the time she witnessed Metrozen’s note, to the time she signed her own note, through the time that she paid monthly interest, and up to the time she wrote texts and emails plainly acknowledging her indebtedness, that she had received nothing from Metrozen.
41The defendant did not even receive the $52,000 commission that she had been promised by Metrozen either. She was taken-in by a fraudster and led the plaintiff into his grasp as well. But she recognized her agreement. She understood it was there in effect as a guarantee to the plaintiff in the event that the investment “went sour”. And that is indeed what happened.
42If I was not able to decide the case on the written record, I would have no hesitation rejecting the defendant’s evidence and arguments in face of her own documents, documented knowledge, and participation throughout. Even her final email to the plaintiff’s counsel in capital letters blaming the plaintiff for advancing the funds to Mr. Hall instead of advancing them to the lawyer for Metrozen’s mortgagee, flies in the face of the fact that the defendant was at the bank, at Mr. Hall’s office for the advance, and signed the Metrozen promissory note while there. She made no protest when she signed her own promissory note three months later and paid interest for the ensuing two years. Her claim three years later that it was all wrong is simply belied by her repeated acknowledgements of her indebtedness until the plaintiff went to a lawyer.
43There is nothing left to consider at a trial. There is nothing that the defendant can say new now that will not be contradicted by the compelling, contemporaneous documentation or will not lack all credibility for not being mentioned in her evidence on this motion.
44I am not satisfied that the plaintiff has proved that a specific interest rate was agreed upon in an enforceable amount. The plaintiff adduced no evidence to prove the quantum of prejudgment interest. Although there were some pieces of evidence indicating that an interest rate of prime plus ½% or 8%-9% may have been discussed, the payments of $600 per month actually made by the defendant equate to an annual simple interest rate of just 1.8%.
45Accordingly, I order interest payable under ss. 128 and 129 of the Court of Justice Act, RSO 1990 c C.43. The parties are to agree on the amount of prejudgment interest due taking into account the payments made by the defendant.
46The plaintiff may deliver cost submissions no later than February 8, 2021. The defendant may deliver cost submissions no later than February 15, 2021. Both parties shall deliver a Costs Outline. In addition, they may also deliver copies of any offers to settle on which they rely. Submissions shall be no longer than three pages (not counting the Cost Outlines and offers to settle).
47All material is to be filed through the Civil Submissions Online portal and shall also be sent to me in searchable PDF format as an attachment to an email to my Judicial Assistant. No case law or statutory material is to be submitted. References to case law and statutory material, if any, shall be embedded in the parties’ submissions as hyperlinks
FL Myers J
Released: February 1, 2021
COURT FILE NO.: CV-19-00624050
DATE: 20210201
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HEDIA BOOJI also known as LINDA BOUJI
Plaintiff
– and –
KARRUNAWATTI POONAI also known as KAY POONAI
Defendant
Defendant REASONS FOR JUDGMENT
F.L. Myers J.
Released: February 1, 2021