Court File and Parties

COURT FILE NO.: CV-14-506168 DATE: 2022-03-31 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Wasiem A. Diab, Plaintiff – and – George Tsitsos and Haralabos Tsitsos, Defendants

Counsel: Holder, K., for the Plaintiff Chau, C. and Van Kralingen, A., for the Defendants

HEARD: September 16, 2021

Reasons for Decision

Sugunasiri, J.:

Overview:

[1] In May of 2012, Bobby and Georgia Tsitsos, and Georgia’s sister, Kakouli Poka, bought 41 Hill Crescent in Toronto. The buyers granted a vendor take back mortgage to fund the property and each contributed one-third of the down payment. According to the Statement of Claim, Bobby was short $160,000 and Wasiem Diab agreed to loan the money to him. At the time Wasiem was in a romantic relationship with Kakouli. The relationship between the two couples later soured and has led to litigation on multiple fronts. In this action Diab claims a quarter interest in 41 Hill Crescent based on an alleged agreement amongst the parties. Having now abandoned that claim, Diab seeks repayment of monies alleged to have been loaned to Bobby. The wrinkle in the story is that Bobby denies the oral loan agreement and instead pleads that the money came from Kakouli with the understanding that Bobby would repay her. Bobby later found out that the money Kakouli provided in fact came from Wasiem.

[2] All parties agree that this dispute is ripe for summary judgment because the case rises and falls on the singular legal question of whether Wasiem and Bobby had an oral agreement for Wasiem to loan Bobby $160,000. I agree that summary judgment is the appropriate procedure. I can adjudicate the issue on the record before me. There is no genuine issue requiring trial.

[3] I dismiss Wasiem’s action with costs payable to Bobby and Georgia. He has not proven on a balance of probabilities that he had an oral agreement with Bobby. The factual foundation of his claim against Bobby is that he spoke directly with Bobby and entered into an oral loan agreement. It is clear from the record that Wasiem and Bobby never spoke at the time the money was secured. Only Kakouli and Bobby spoke of the loan. Wasiem does not plead, nor has sought to plead, that Kakouli was his, or Bobby’s agent, charged with brokering a deal between them. Along the same lines, there is no allegation in the Statement of Claim, whatsoever, that Wasiem loaned Georgia any money. This alone liberates her from the claim. Finally, I reject Wasiem’s late breaking theory that if the loan was actually made to Kakouli and not Bobby and Georgia, they were nevertheless the primary debtors. This is nowhere in the pleading, nor the responding materials, but is only raised in the factum.

Analysis:

[4] It is well established that summary judgment is a useful tool to shorten the life of a case if it is proportionate, efficient, and cost effective to do so. The first step of the analysis is whether I can fairly adjudicate the case with the record before me and conclude that there is no genuine issue requiring trial. In doing so the parties are expected to have put their best foot forward – in other words, there is nothing further they could offer at a trial (Hryniak v. Mauldin, 2014 SCC 7 and Rule 20.02(2) of the Rules of Civil Procedure). Wasiem sued to obtain his share of 41 Hill Crescent or to recover the $161,000 he loaned to facilitate its purchase. Having abandoned his trust claim, he is left with the allegations with respect to the loan. I agree that this discrete issue is ripe for summary judgment.

[5] In the Statement of Claim Wasiem alleges the following:

4. In or about May 2012, Kakouli, Georgia, and Bobby decided to purchase the Hill Property. They agreed that each of their names would go on title. The three of them would each contribute approximately one-third of the down payment and required closing costs.
5. The purchase price of the Hill Property was $3,350,000.00 and Kakouli, Georgia and Bobby granted a vendor take-back mortgage of $2,100,000.00.
6. The balance due on closing for the Hill property was $1,288,103.23. Kakouli and Georgia each contributed $417,956.40 to the closing balance. Bobby was to pay the remaining balance owing of $452,190.43.
7. Bobby took out a second mortgage on his and Georgia’s home in Thompson, Manitoba, which provided him with $293,216.83. As Bobby did not have the money to pay the remaining approximately $160,000.00 of his share, Wasiem agreed to loan Bobby the difference. Wasiem ultimately loaned Bobby $161,000 so that Bobby could pay his share of the Hill Property closing balance.
8. Wasiem and Bobby agreed orally that Bobby would repay the $161,000 within 2 months. Wasiem at that time had been arranging to make a down payment on a different investment property, but he passed up that opportunity in order to be able to invest in the Hill Property.

[6] In response, Bobby and Georgia allege that there was no shortage of funds for Bobby to pay his share of the transaction. They were surprised when Kakouli told them that she would provide the $161,000 deficit (Statement of Defence paragraphs 22,23). Kakouli paid the solicitor directly. It was only just before closing that Bobby and Georgia came to know that Wasiem had provided the funds to Kakouli. The transaction closed in May of 2012.

Wasiem posits only one theory of the case against Bobby and makes no claim against Georgia

[7] Wasiem advances only one theory in his Statement of Claim for repayment of the $161,000– namely that he and Bobby agreed orally to a loan that would be repaid in 2 months. It is trite law to say that the pleadings define the action and summary judgment grants or denies judgment on the pleadings. As noted by the Court of Appeal in Mihaylov v 1165996 Ontario Inc., 2017 ONCA 116 at para. 123: “it is fundamental to the litigation process that lawsuits be decided within the boundaries of the pleadings.” Absent a reasonable explanation for not seeking an amendment of the Statement of Claim, it is fair to limit Wasiem’s action to the four corners of his pleading. Having resiled from his trust claim over the Hill Property, Wasiem has no claim against Georgia.

[8] Wasiem also cannot succeed against Bobby. Bobby, Georgia and Wasiem all delivered affidavits in support of the summary judgement motion. Wasiem also testified in the related action between Bobby, Georgia and Kakouli in a related action. Bobby and Georgia delivered a Request to Admit that was largely accepted. The result is the uncontroverted evidence that Wasiem loaned the money to Kakouli by way of four bank drafts; he and Bobby never spoke about the loan; and that it was Kakouli who asked for the monies on the understanding that Bobby and Georgia would repay her. In other words, the evidence is clear that there was no conversation between Wasiem and Bobby before he loaned the money. If there was no conversation, there could not have been a contract. Enforceable oral agreements require that there be an offer, acceptance and consideration; certainty of essential terms and an intention to create a legally binding agreement (IMG Canada Limited v General Motors of Canada Limited, 2017 ONSC at para 9). This alone is sufficient to dismiss Wasiem’s action against Bobby.

[9] If I am incorrect, Wasiem’s new theories of his case also cannot succeed.

Bobby’s later promises to pay Wasiem after that fact does not form a contract

[10] Wasiem argues that Bobby’s affirmation to pay Wasiem back after he learned that Kakouli received the funds from him proves the contract between them. I disagree. A valid contract requires consideration. In this case, Wasiem is essentially arguing that his payment to Kakouli at a time when Bobby was unaware of the payment is consideration for the later promise. However, past consideration is no consideration unless Wasiem can prove mutuality between the loan and the Bobby’s promise to pay him. In this case, the two events are not tied together because all parties agree that Wasiem and Bobby did not speak of the loan prior to it being made. There is no link between the past consideration and the later promise, nor was the loan given at Bobby’s behest. These are key elements for past consideration to create a binding contract for a future promise. As Professor Fridman notes, this leaves the subsequent promise nothing more than a gratuitous promise (as cited in Wilburn Prop. V. Silver Peak, 2001 BCSC 1084 at para. 80 citing Fridman, G.H.L. in The Law of Contract, 4th ed. At page 118.)

Insufficient evidence that Kakouli was agent for the parties

[11] Another theory Wasiem proposes is that Kakouli was Bobby’s agent who entered into the loan arrangement on Bobby’s behalf. Bobby and Georgia reside in Manitoba. To facilitate the signing of the documents and to close the purchase of 41 Hill Crescent, they executed a limited Power of Attorney in favour of Kakouli “To do on behalf of the undersigned an act and to sign any documentation reasonably required to complete the purchase and any required new Mortgage financing for the completion of the purchase of the property..” Wasiem surmises or believes that this Power of Attorney authorized Kakouli to secure financing to complete the transaction, including obtaining a loan from him on behalf of Bobby and Georgia.

[12] I give little weight to Wasiem’s beliefs and evidence in this regard. He was not party to the Power of Attorney nor was present when it was discussed or executed. I also draw an adverse inference on failing to tender evidence from Kakouli about the circumstances of this Power of Attorney. Wasiem’s theory rests on the impact and understanding of this Power of Attorney. Wasiem argued that he did not tender evidence from Kakouli because she was found to be an unreliable witness in another proceeding. This does not exempt him from providing her evidence in this motion on what he identifies as a key issue (see Rule 20.02(1) and Lane v Kock, 2015 ONSC 1972 at para. 3). His explanation instead invites the reasonable inference that he did not call her because he was concerned that her evidence would not support his theory.

[13] In contrast, Georgia and Bobby have attested that the Power of Attorney was intended to allow Kakouli to sign the closing documents – not enter into loan agreements with Wasiem unbeknownst to them. I accept their direct evidence on this point and find that Kakouli was not conscripted to act as an agent of broker to secure Wasiem’s funds.

Bobby and Georgia are not “primary debtors”

[14] Wasiem’s final late breaking theory is that Bobby and Georgia were the primary lenders of the loan brokered by Kakouli. Aside from the evidentiary hurdle noted above, this position is not supported in law. I adopt Bobby and Georgia position in paragraphs 12-16 of their Reply Factum. Wasiem relies on Gillies v. Brown, 1916 CarswellOnt 178 (SCC), Sarbit v. Hanson, 1950 CarswellMan 5 and Boorstein v. Moffatt, 1903 Carswell NS 20 to argue that where a defendant agreed to pay for the debts of another, the defendant was liable as a primary debtor.

[15] I agree with the Defendants that these cases are distinguishable because in all three, the third party promises to pay occurred at the same time as the contract formed between the main parties or after part performance of the contract. Again, in this case, there is no evidence that Wasiem and Bobby spoke at the time of the loan to Kakouli or until after the transaction closed. Further, the timing of the promises in the above three cases did not raise the issue of past consideration which is present here.

Costs:

[16] Bobby and Georgia uploaded their Bill of Costs for the action and motion. Wasiem has not done so. Costs are presumptively owed to Bobby and Georgia on a partial indemnity basis. I strongly urge the parties to resolve the quantification of costs, failing which the parties can contact my assistant Jessica.Perri@ontario.ca to arrange for a case conference.

Conclusion:

[17] I dismiss the action with partial indemnity costs of the action and motion owed to Bobby and Georgia by Wasiem.

Justice P. Tamara Sugunasiri Released: March 31, 2022