COURT FILE NO.: CV-21-00000730

DATE: 2021 11 25

SUPERIOR COURT OF JUSTICE - ONTARIO

BETWEEN:

RE: STARTMYPLAN.CA LIMITED, Plaintiff

AND:

TU LINH THAI and TORIAN TRADING LTD., Defendants

BEFORE: Chozik J.

COUNSEL: Matthew R. Harris, Counsel for the Plaintiff

Dr. Ran He, Counsel for the Defendants

HEARD: September 28, 2021

ENDORSEMENT

[1] The plaintiff, Startmyplan.ca Limited (“SMPL”) brings a motion for summary judgment against the corporate defendant, Torian Trading Ltd. (“Torian”), and its director, Tu Linh Thai (“Thai”), in her personal capacity.

[2] SMPL is a company that specializes in secured and unsecured lending. It is not disputed that SMPL advanced $100,000 to Torian on July 9, 2020, (“Loan 1”) and loaned a further $38,886.69 on July 14, 2020 (“Loan 2”). Thai signed a promissory note in respect of Loan 1. No written agreement was entered into in respect of Loan 2.

[3] The issues on this summary judgment motion are: (i) whether the fee or interest charged by SMPL on Loan 1 is enforceable, and (ii) whether Thai is liable for the debts in her personal capacity as the guarantor on the promissory note.

[4] Loan 1 was initially advanced by SMPL for a term of two months and was to be repaid by September 10, 2020. The “fee” charged by SMPL on the $100,000 loan for those two months was $25,000. Annualized, this amounts to an effective interest rate of 150% which exceeds the criminal rate of interest fixed at 60% in s. 347(2) of the Criminal Code, R.S.C., 1985, c. C-46.

[5] On September 9, 2020, Thai requested an extension of Loan 1 for a period of one month. SMPL agreed to extend the loan until October 9, 2020, for an additional fee of $15,000. Annualized, this amounts to an effective interest rate of 180%.

[6] There was no written agreement or promissory note with respect to Loan 2, though Adrian Pryce, the director of SMPL claimed in his sworn affidavit that the terms of that loan were the same as the promissory note in respect of Loan 1.

[7] Pursuant to Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court must grant a motion for summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or a defence. There is no genuine issue requiring a trial when the judge hearing a motion for summary judgment is able to reach a fair and just determination of the merits of the claim or defence on the evidence submitted by the parties: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49.

[8] The court may also use additional fact-finding powers provided for in Rule 20.04(2.1), which include weighing the evidence, evaluating the credibility of the deponents, and drawing any reasonable inferences from the evidence: Paolucci v. John Doe et al, 2015 ONSC 7675 at paras. 10-11.

[9] In this case, the defendants do not dispute that Torian owes SMPL $138,886.69.

Fee or Interest Rate:

[10] Having regard to all of the evidence, I have concluded that the fee or interest charged by SMPL is excessive and illegal. The terms of the promissory notes requiring such interest rates shall be set aside pursuant to s. 2 of the Unconscionable Transactions Relief Act, R.S.O. 1990, c. U.2 and s. 347(2) of the Criminal Code.

[11] Section 2 of the Unconscionable Transactions Relief Act provides that:

The court may,

2 Where, in respect of money lent, the court finds that, having regard to the risk and to all the circumstances, the cost of the loan is excessive and that the transaction is harsh and unconscionable, the court may,

reopen transaction and take account

(a) reopen the transaction and take an account between the creditor and the debtor;

reopen former settlements

(b) despite any statement or settlement of account or any agreement purporting to close previous dealings and create a new obligation, reopen any account already taken and relieve the debtor from payment of any sum in excess of the sum adjudged by the court to be fairly due in respect of the principal and the cost of the loan;

order repayment of excess

(c) order the creditor to repay any such excess if the same has been paid or allowed on account by the debtor;

set aside or revise contract

(d) set aside either wholly or in part or revise or alter any security given or agreement made in respect of the money lent, and, if the creditor has parted with the security, order the creditor to indemnify the debtor.

[12] Section 347(2) of the Criminal Code provides that:

credit advanced means the aggregate of the money and the monetary value of any goods, services or benefits actually advanced or to be advanced under an agreement or arrangement minus the aggregate of any required deposit balance and any fee, fine, penalty, commission and other similar charge or expense directly or indirectly incurred under the original or any collateral agreement or arrangement; (capital prêté)

criminal rate means an effective annual rate of interest calculated in accordance with generally accepted actuarial practices and principles that exceeds sixty per cent on the credit advanced under an agreement or arrangement; (taux criminel)

interest means the aggregate of all charges and expenses, whether in the form of a fee, fine, penalty, commission or other similar charge or expense or in any other form, paid or payable for the advancing of credit under an agreement or arrangement, by or on behalf of the person to whom the credit is or is to be advanced, irrespective of the person to whom any such charges and expenses are or are to be paid or payable, but does not include any repayment of credit advanced or any insurance charge, official fee, overdraft charge, required deposit balance or, in the case of a mortgage transaction, any amount required to be paid on account of property taxes; (intérêt)

[13] I find that the lending fees charged by SMPL on Loan 1 and Loan 2 are interest as defined above in the Criminal Code. The $40’000 in aggregate fees charged by SMPL, constituting an effective rate of interest of 150% and 180% respectively, are, therefore, in excess of the maximum allowable interest rate of 60% and constitute a criminal rate of interest. Such rate is prima facie unconscionable; the relief provided in s. 2 Unconscionable Transactions Relief Act will apply.

Thai’s Personal Liability as the Guarantor:

[14] Using the additional fact-finding powers available under Rule 20, I am also satisfied that there is no genuine issue requiring a trial with respect to Thai’s liability for Torian’s debts in her personal capacity as the guarantor.

[15] The “Security Agreement and Promissory Note” dated July 9, 2020, has the following heading:

SECURITY AGREEMENT AND PROMISSORY NOTE

This Security Agreement (the “Agreement”) is made and effective July 9, 2020.

BETWEEN: STARTMYPLAN.CA LIMITED (the “Secured Party”), a corporation organized and existing under the laws of the Province of Ontario, with its head office located at:

10 Kingsbridge Garden Circle, Suite 800

Mississauga, Ontario L5R 3K6

AND: TORIAN TRADING LTD. (the “Debtor”), a corporation organized and existing under the laws of the Province of Ontario, with its head office located at:

11-1818 Bently Street

Markham, Ontario L3R 3Y1

AND: Tu Linh Thai (“the Guarantor”), an individual with their main address located at:

804 Cornell Rouge Blvd.

Markham, Ontario L6B 0K6

[16] The obligations or rights of the guarantor are not set out anywhere in the agreement. Only one signature line was provided. Thai signed on that signature line on the signature page. No corporate title was listed after her signature. There is nothing to indicate that she was signing in her capacity as the director or officer of Torian. There is no indication that she signed on behalf of the corporation. For example, there is no corporate title or statement such as “I have the authority to bind the corporation” or “for or on behalf of the corporation”: Morris v. Call the Car Alarm Guys Inc., 2005 454 (ON CA), 193 O.A.C. 238, at para. 2. The promissory note is a contract and it must be read as a whole. Contractual interpretation aims to give effect to the intention of the parties. Given the preamble, where Thai is identified as the guarantor, and the absence of any indication that she was signing the document in her capacity solely as a corporate officer, I find that she must have known that she was signing as the guarantor as well as the corporation.

[17] In my view, no additional evidence is required to demonstrate the terms of the guarantee. On its face, the promissory note makes clear that Thai is jointly liable for the debt.

[18] There are no genuine issues requiring a trial.

ORDER:

[19] Summary judgment shall issue as against the defendants Torian and Thai for $138,886.69 for which the defendants are jointly and severally liable.

[20] SMPL is not entitled to the fees of $40,000 as these are set aside pursuant to s. 2 of the Unconscionable Transactions Relief Act and s. 347(2) of the Criminal Code. The pre-judgment and post-judgment interest rate payable shall be set in accordance with the Courts of Justice Act.

COSTS:

[21] With respect to costs, SMPL sought costs of $10,600 for this action. The defendants submitted that this amount was fair, reasonable, and proportionate if SMPL was wholly successful. The defendants sought no costs if successful in opposing summary judgment.

[22] In my view, SMPL was successful in large part having obtained summary judgment against both defendants for the bulk of its claim. It is entitled to its costs. Costs of $10,600 are fair and reasonable in the circumstances. The defendants shall pay costs of $10,600 to the plaintiff, SMPL, forthwith.

“E. Chozik”

Chozik J.

Date: November 25, 2021