COURT FILE NO.: CV-18-00078646-0000
DATE: 2022-07-25
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: J. Lalonde & Fils (1980) Ltée. v. Robert St-Denis
BEFORE: Associate Justice Kaufman
COUNSEL: Jessica Byles, for the Plaintiff
John Siwiec, for the Defendant
HEARD: May 16, 2022
E N D O R S E M E N T
[1] Between 2013 and 2018, the plaintiff supplied construction materials to Les Maisons St-Denis Homes Inc. (“Les Maisons St-Denis”), a corporation controlled by the defendant Robert St-Denis. Les Maisons St-Denis filed an assignment in bankruptcy on November 30, 2018. On that date $236,638.48 was owing to the plaintiff in respect of outstanding invoices.
[2] The plaintiff moves for summary judgment against Robert St-Denis, who guaranteed the payment of Les Maisons St- Denis’ purchases in his personal capacity. This motion raises the following issues:
a) Is there a genuine issue requiring a trial with respect to Mr. St-Denis’ personal guarantee?
b) Does the defendant’s limitations defence raise genuine issues requiring a trial?
The Test for Summary Judgment
[3] The Court must grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. There is no genuine issue requiring a trial when a fair and just determination on the merits can be reached without a trial. This will be the case where the process allows the judge to make the necessary findings of fact, allows the judge to apply the law to the facts, and the summary judgment process is a proportionate, more expeditious and less expensive means to achieve a just result.[^1]
Mr. St-Denis’ Guarantee
[4] Mr. St-Denis signed a guarantee on April 27, 2013. The defendant argues that there is a genuine issue requiring a trial because Mr. St-Denis understood, from his review of the credit request, that his guarantee was limited to $60,000. In addition, the defendant submits that plaintiff did not file an affidavit from a person with personal knowledge about the amount, and enforceability, of the guarantee. I am not persuaded by this submission.
[5] Mr. St-Denis was examined for discovery on December 18, 2019. He acknowledged that on April 27, 2013, he applied for commercial credit with the plaintiff. He does not recall who was at the meeting. The form he signed had been filled out by someone else. At this meeting, Mr. St-Denis requested $60,000 of credit: « Montant de crédit desire : $60,000 ».
[6] The form in question is written in French. Mr. St-Denis signed the form twice, once above the signature lines for the guarantor and once for the credit applicant. For the purposes of this motion, the following are the relevant terms of the contract between the parties:
Le requérant et le(s) garants garantissent le paiement de toutes factures émises par J. Lalonde et Fils (1980) Ltée. au non de l’entreprise indiqué ci-haut pour tous matériaux et achats fournis et / ou livrés.
Il est entendu que tous les produits et matériaux achetés dans un mois deviennent payable le 15 du mois suivant. Des frais de 26.8% annuel (2% par mois) seront exigés sur tout montant passé dû.
[7] On May 8, 2013, Mr. St-Denis received a “welcome letter” from the plaintiff, which reminded him that payment was due on the 15th day of the month following any purchase, and that a 2% monthly interest fee (26.8% per year) would be applied to overdue accounts. There was no mention made of any credit limit.
[8] Mr. St-Denis acknowledges that, at some point, his credit limit was increased. He does not recall requesting an increase, but testified that he required additional credit to continue his company’s operations:
Q. So the questions if I could maybe ask it again was, were you in excess of your credit limit and that’s why you said you had no choice but to ask for a credit increase?
A. Yes.
Q. Okay, and you needed the credit to continue your operations, continue…
A. Yes.
Q. Right, and at that meeting did they ask you, “Mr. St-Denis, you’re in excess of your limits here. What’s the plan”?
A. Yes.
Q. And what was the plan? What did you discuss?
A. That I wanted to proceed with my business, to keep going.
[9] I conclude that there is no genuine issue requiring a trial with respect to the enforceability of the guarantee. Mr. St-Denis acknowledges that he applied for credit and signed a personal guarantee. While the form specifies that Mr. St-Denis requested a $60,000 credit limit, there is no reference in any of the materials before the Court, to the amount of credit that was actually approved. Moreover, Mr. St-Denis admits that sometime in 2017, he required additional credit and he attended a meeting with representatives of the plaintiff to discuss this issue. It is not material whether he requested additional credit, or whether the plaintiff offered to extend more credit. Mr. St-Denis admitted that he had no choice but to continue borrowing above the $60,000 limit to continue operations.
[10] Importantly, the personal guarantee that Mr. St-Denis signed is not limited to any credit limit. It covers the payment of all invoices issued by the plaintiff in the name of Les Maisons St-Denis, without any limitations or restrictions: « le paiement de toutes factures émises par J. Lalonde et Fils (1980) Ltée. au non de l’entreprise indiqué ci-haut pour tous matériaux et achats fournis et / ou livrés ».
[11] Based on the foregoing, I determine that Mr. St-Denis is personally liable for the payment of Les Maisons St-Denis’ outstanding invoices, subject to the defendants’ limitations defence.
The Defendant’s Limitations Defence
[12] This action was commenced on December 7, 2018. The defendant argues that invoices representing $72,447.67 were delivered more than two days before the Statement of Claim was issued, and are accordingly statute barred pursuant to section 4 of the [Limitations Act][^2]. For the foregoing reasons, I determine that the defendant’s limitations defence raises a genuine issue for trial.
[13] Mr. St-Denis built houses with the construction materials he purchased from the plaintiff. Whenever he purchased materials, Mr. St-Denis identified the particular project for which the materials were purchased, and the project number was noted on the plaintiff’s invoices. Mr. St-Denis would pay the plaintiff after the houses he built were sold.
[14] Mr. St-Denis admitted to receiving monthly statements from the plaintiff. He also acknowledged that he never disagreed with any of the invoices.
[15] On November 30, 2018, when Les Maisons St-Denis filed an assignment in bankruptcy, Mr. St-Denis listed the plaintiff as an unsecured creditor and identified the amount owed as $232,918.75. Mr. St-Denis conceded on discovery that he agreed, at the time, that Les Maisons St-Denis owed this amount to the plaintiff.
[16] Section 13(11) of the Limitation Act provides that partial payment of a liquidated sum restarts the limitation period if the payment is made by the person whom the claim is made against.[^3] The plaintiff argues that the account between the parties was a “running account” to which Mr. St-Denis made a partial payment on February 13, 2018, thereby re-starting the limitations period.
[17] The determination of this issue turns on whether the various invoices the plaintiff issued to Les Maisons St-Denis constitute separate or discrete debts, or whether there existed a running account. In the latter case, the court will treat the balance owing as a single debt.[^4]
[18] The plaintiff points to a single account statement dated November 30, 2018, filed as “Exhibit ‘C’” to Serge Lalonde’s affidavit, as evidence of a running account. That account statement breaks down the sums owed under three separate construction projects, and specifies a total “global” amount owed. The problem for the plaintiff is that this is the only account statement in this form filed in this motion. All the other invoices filed by the parties relate to discrete purchases by Les Maisons St-Denis in relation to specific projects, and none of the invoices specify a global amount owed.
[19] The defendant acknowledged during discoveries that he received monthly invoices from the plaintiff. If these monthly invoices were similar to the account statement found at “Exhibit ‘C’” of Serge Lalonde’s affidavit, the plaintiff could have established that there was a running account which should be treated, for the purposes of limitations, as a single debt. Unfortunately, these account statements are not before the Court, and I cannot determine this issue in the plaintiff’s favour based on the evidence before me.
[20] In addition, I agree with the defendant that there is insufficient evidence to conclusively determine that Les Maisons St-Denis made a partial payment on February 13, 2018, in respect of a running account. The only evidence on this issue is an invoice dated February 13, 2018, for the delivery of lumber totalling $105.09. Under the amount of the invoice, there is a handwritten notation: “left to pay $21.49”.
[21] There is no evidence about who made this notation and what it means, and Mr. St-Denis was not asked about it on discovery. Pursuant to Rule 39.01(4) of the Rules of Civil Procedure, an affidavit for use on a motion may contain statements of the deponent’s information and belief, if the source of the information and the fact of the belief are specified in the affidavit.[^5] Mr. Serge Lalonde states in his affidavit that Les Maisons St-Denis made a partial payment to the account on February 13, 2018, but he does not specify the source of this information.
[22] Moreover, the February 13, 2018 invoice does not specify the “global amount” that is outstanding. Even if a partial payment of $83.60 was made upon delivery of the plaintiff’s lumber, this would not be sufficient to conclusively determine that Mr. St-Denis acknowledged a debt for the entire balance owed.
[23] At the hearing, counsel for the plaintiff Ms. Byles raised a further argument. She argued that Mr. St-Denis admitted on discovery that he never disagreed with any of the plaintiff’s invoices, and conceded that when Les Maisons St-Denis listed the plaintiff as an unsecured creditor in its statement of affairs, Mr. St-Denis believed that the sum of $232,918.75 was owing to the plaintiff.
[24] Any acknowledgement of a debt made at discoveries after the expiration of a limitations period does not reinstate the limitation period.[^6] Moreover, I agree with the defendant that listing a debt to a creditor in bankruptcy filings does not constitute an acknowledgment of a debt that restarts the limitations period. The Manitoba Court of Queens’ Bench came to this conclusion in National Retail Credit Service v. Delorme.[^7] This decision is consistent with the Bankruptcy and Insolvency Act (“BIA”)’s statutory scheme, which confers upon the trustee the responsibility to determine if a claim is statute barred.[^8]
[25] When a corporation makes a voluntary assignment of bankruptcy, the trustee must send a notice to every known creditor calling for the first meeting of creditors.[^9] Creditors who intend to vote as creditors at a meeting of creditors must submit a proof of claim.[^10] The BIA defines provable claims broadly:
Claims provable
121 (1) All debts and liabilities, present or future, to which the bankrupt is subject on the day on which the bankrupt becomes bankrupt or to which the bankrupt may become subject before the bankrupt’s discharge by reason of any obligation incurred before the day on which the bankrupt becomes bankrupt shall be deemed to be claims provable in proceedings under this Act.[^11]
[26] Pursuant to section 135 of the BIA, the trustee is responsible for examining every proof of claim. A proof of claim is not sustainable in respect of a debt that was statute barred at the date of the bankruptcy.[^12]
[27] If the inclusion of a debt in a bankrupt’s statement of affairs constituted an acknowledgment for limitations purposes, as the plaintiff contends, then this would be inconsistent with the scheme of the BIA which confers upon the trustee the responsibility of disallowing claims that are statute barred.
DISPOSITION
[28] Based on the foregoing, the Court grants partial summary judgment in respect of the invoices which were issued within two years of the date this claim was issued, and finds that there is a genuine issue requiring a trial with respect to the defendant’s limitations defence.
[29] If the parties cannot agree on costs within the next 30 days, they may seek further directions on costs submissions from my office.
Alexandre Kaufman
Associate Justice A. Kaufman
DATE: July 26, 2022
COURT FILE NO.: CV-18-00078646-0000
DATE: 2022-07-26
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: J. Lalonde & Fils (1980) Ltée. v. Robert St-Denis
BEFORE: Associate Justice A. Kaufman
COUNSEL: Jessica Byles, for the Plaintiff/Moving Party
John Siwiec, for the Defendant
ENDORSEMENT
Associate Justice A. Kaufman
DATE: July 26, 2022
[^1]: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49.
[^2]: Limitations Act, 2002, SO 2002, c 24, Sched. B.
[^3]: Ibid, s. 13(11).
[^4]: Ryu Electric v. Sam Bung Hong, 2017 ONSC 5109, at paras 50-51.
[^5]: Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[^6]: Cross Bridges Inc. v Z-Teca Foods Inc., 2015 ONSC 2632, at paras 76 and 77.
[^7]: 2011 MBQB 290, at para 9.
[^8]: Bankruptcy and Insolvency Act, R.S.C 1985, c. B-3.
[^9]: Ibid., s. 102(1).
[^10]: Ibid., s.109.
[^11]: Ibid., s. 121(1).
[^12]: Morton, In re ;Morton, Bartling and Company Limited, Ex Parte, 1922 CanLII 146 (SK QB); see also Lloyd W. Houlden, Geoffrey B. Morawetz & Janis P. Sarra, The 2021-2022 Bankruptcy and Insolvency Act (Toronto, ON: Thomson Reuters Canada, 2021) at 734.