COURT FILE NO.: CV-19-00617420
DATE: 20220201
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
WEB OBJECTIVE INC.
Plaintiff
– and –
CHRISTOPHER STRAMACCHIA and ISEE AUTOMATION INC.
Defendants
Joseph Figliomeni and Margarita Dvorkina, for the Plaintiff
Jeffrey W. Nanson, for the Defendants
HEARD: December 16 and 17, 2021
M. D. Sharma J.
[1] This is an action to collect on a loan given by the plaintiff, Web Objective Inc., to the defendant, iSee Automation Inc. The plaintiff also seeks to collect from the personal defendant, Christopher Stramacchia, on a personal guarantee with respect to that loan.
[2] The defendants argue that the claim on the debenture is barred by the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. They also argue that the defendant, Christopher Stramacchia, did not sign the personal guarantee upon which the plaintiff relies.
Procedural History
[3] This matter was first scheduled before me on June 10, 2021 as a summary judgment motion brought by the plaintiff. It was previously scheduled before Justice Akbarali on March 10, 2021 but adjourned to allow the defendants to obtain a handwriting expert.
[4] At the June 10, 2021 attendance and after review of the material, it was clear to me that the authenticity of the signatures on the guarantee was a critical issue in this action. For this reason, I permitted an adjournment to allow the defendants to deliver further affidavits to respond to the late filed affidavits of the plaintiff. The parties were of the view that if there was going to be an adjournment, it would be prudent to dispose of this case by way of summary trial. I agreed. Given that credibility was going to be a key issue, a summary trial would be a fair, just, and efficient means of disposition. It would preserve the time and expense already incurred in the preparation of affidavits and allow for credibility to be assessed. The summary trial was scheduled to proceed on September 29 and 30, 2021. It had to be adjourned again due to the Court’s closure to mark the first National Day of Truth and Reconciliation on September 30, 2021.
Parties
[5] The plaintiff, Web Objective Inc. (“Web Objective”), is a holding company used by its sole officer and director, Tom Douramakos, for the purpose of investing in technology businesses.
[6] The defendant, iSee Automation Inc. (“iSee”), is an Ontario corporation. The defendant, Christopher Stramacchia, is the sole officer and director of iSee, a corporation which had worked on technology to place cameras on helmets of sports referees.
[7] In these reasons and with no disrespect, I refer to Christopher Stramacchia by his commonly used first name, Chris, because that is how he was often referred to in this trial and to distinguish him from his uncle, Gino Stramacchia, who was also a witness in this trial. I similarly refer to Tom Douramakos, as Tom.
Facts
[8] It is not disputed that Web Objective loaned iSee $50,000, which was set out in a Secured Convertible Debenture Subscription Agreement (the “Debenture”), dated April 30, 2016. This document was prepared by iSee’s lawyers, Michael Tibollo and Cynthia Cosentino.
[9] The Debenture earned interest at a rate of 10% per annum, compounded annually, for a term of two (2) years. In the event of a Financing Transaction defined in the Debenture, the debenture would convert to shares in iSee. If the Financing Transaction does not occur, the debt of $50,000 plus interest shall be repayable by iSee upon the expiration of two years.
[10] The Financing Transaction did not occur. As such, the principal loan and interest was to be repaid to Web Objective by April 30, 2018. It is undisputed that this amount remains unpaid.
[11] The plaintiff’s evidence is that despite the terms of the Debenture which gave Web Objective a first priority general security over iSee’s assets, including its intellectual property, Chris assigned iSee’s assets to a Nevada-based corporation, BRK, Inc. (“BRK”). This transaction led to litigation in the United States, and a judgment against iSee for $2.4 million USD. That judgment was enforced in Ontario, resulting in judgment against iSee on June 24, 2019 for $3.224 million. BRK has launched further proceedings against iSee in this Court. The defendants did not dispute this during the trial of this action.
[12] The plaintiff’s evidence is that Chris signed a personal guarantee for iSee’s indebtedness to Web Objective. It adduced in evidence a signed Guarantee, dated April 30, 2016. However, Chris denies agreeing to a personal guarantee and says the signature on this document is not his.
[13] Chris’ evidence is that iSee has not carried on any business since 2017. He does not dispute that his signature appears on the Debenture, as signatory for iSee, but he disputes signing or agreeing to the Guarantee.
[14] This action was commenced on April 3, 2019.
Analysis
Issue 1: Is the plaintiff barred from bringing its claim on the Debenture due to the Limitations Act?
[15] The defendants argue that the plaintiff made a demand for the funds to be repaid on September 7, 2016, but it did not issue its claim until April 3, 2019. Since this action was commenced more than two years after the demand, they argue this claim is statute barred under the Limitations Act.
[16] The defendants entered in evidence an email from Tom to Chris, dated September 7, 2016, in which Tom states:
Chris
For me and Mike to continue working and helping you to grow the company this is what we want:
- Our Debenture money to be paid in full. $125,000 approximately.
[17] The reference to “Mike” is Mike Anobile, another investor, who invested $75,000 in iSee. The remaining $50,000 of the $125,000 requested represents the funds loaned by Web Objective.
[18] Chris responded the same day, as follows:
Tom,
- Your debenture money will be paid in full as per the debenture agreements.
[19] Pursuant to s. 5(1)(a)(i) and s. 5(3) of the Limitations Act, for a demand obligation, the limitation period begins to run “the first day on which there is a failure to perform the obligation, once a demand for the performance is made”: see also Skuy v. Greennough Harbour Corporation, 2012 ONSC 6998, [2012] O.J. No. 5841, at para. 32.
[20] I am not satisfied that the demand made by Tom for repayment of the Debenture was a demand obligation. In Skuy, Justice Perell provides a comprehensive summary of the law with respect to the impact of the Limitations Acton demand obligations. At para. 31, he summarizes the law with respect to what constitutes a demand obligation:
[31] To determine what is a demand obligation, some guidance is provided by the Bills of Exchange Act, R.S.C. 1985, c. B-4, s.22 (1) which defines a bill payable on demand to be one: (a) that is expressed to be payable on demand or on presentation; or (b) in which no time for payment is expressed. Using this guidance, a debt obligation expressly payable on demand is a demand obligation: Toronto-Dominion Bank v. Formstructures Inc., 2012 ONSC 2256. A debt obligation that does not specify a date for repayment is a demand obligation: Azman v. Viola 2010 ONSC 6455 at para. 39. Where a debt obligation is payable on a fixed date, it is not a demand obligation, even if the obligation stipulates that the lender must give notice or make a demand for payment before enforcing the debt obligation: Berry v. IPC Securities Corp., [2009] O.J. No. 1598 at para. 17 (S.C.J.); National Trust Co. v. Saks, [1994] O.J. No. 2488 (Gen. Div.), varied on other grounds, [1998] O.J. No. 2335 (C.A.). (This is an example of the confusing nature of the law because a non-demand obligation can have a demand component to it.) [Emphasis added.]
[21] The Debenture was not a demand obligation. It states that if iSee does not complete the discussed Financing Transaction (as defined), “the debt with interest shall be repayable by [iSee] upon expiration of the two-year term.” Because there is a fixed date upon which the loan would be repaid, it is not a demand obligation. There is nothing in the Debenture that would support a conclusion that it is a demand obligation.
[22] As such, the two-year limitation period did not begin to run upon demand on September 7, 2016; it began on April 30, 2018 when repayment was to occur. Therefore, the Limitations Act provides no defence.
[23] The defendants admit that if the limitations defence does not succeed, judgment against the corporate defendant, iSee, pursuant to the Debenture should issue.
[24] Accordingly, I grant judgment against iSee in favour of Web Objective for $50,000 plus accrued interest at the rate of 10% per annum for the period of April 30, 2016 to April 30, 2018. Pre- and post-judgment interest is fixed in the amount of 2% per annum.
Issue 2: Did Chris personally guarantee payment of the iSee’s indebtedness to Web Objective?
[25] The burden rests with the plaintiff to establish, on a balance of probabilities, that Chris agreed to personally guarantee payment of the Debenture to Web Objective by iSee, and the terms of any such personal guarantee.
[26] For the reasons that follow, I am satisfied that Chris did agree to personally guarantee the amounts owed to Web Objective, and that the terms of the Guarantee, dated April 30, 2016, govern.
Evidence regarding the Signatures on the Guarantee
[27] Attached to Tom’s affidavit is a Guarantee, dated April 30, 2016, between Web Objective, iSee, Chris, Jaze Bordeaux (“Jaze”), and Chris’s uncle, Gino.
[28] In the Guarantee, Chris, Jaze, and Gino are collectively referred to as the “Guarantor.” Pursuant to its terms, the Guarantor personally guaranteed the indebtedness owed by iSee to Web Objective, legal fees with respect to the enforcement of rights in the Guarantee, and interest at a rate of 12% per annum. The relevant sections are:
• “unconditionally and irrevocably guarantees, as a continuing obligation, and on a joint and several basis, payment to [Web Objective] forthwith and after demand therefor of all present and future indebtedness, obligations and liabilities of any kind whatsoever which [iSee] has incurred or may incur….” (section 2)
• “shall from time to time upon demand by [Web Objective] forthwith pay to the Lender all expenses (including legal fees) incurred by [Web Objective] in the preparation of this Guarantee and the preservation or enforcement of any of its rights hereunder.” (section 13)
• “shall pay to [Web Objective] in respect to any amount payable hereunder (including interest) that is not paid when due, interest from the due date thereof, until paid and after demand, default and judgement at a rate of interest per annum equal to twelve (12%) percent, such interest to be paid monthly on the first day of each calendar month and calculated annually, not in advance.” (section 16).
[29] The Guarantee appears to show that Tom signed it on behalf of Web Objective, and that Chris, Jaze, and Gino signed it as guarantors.
[30] Tom’s evidence was that after the other parties had signed the Guarantee as guarantors, it was sent to him by email and he then affixed his signature. He testified that the Guarantee was sent to him by email from Jaze or Gino, but more likely Jaze, and that he did not receive it from Chris. Tom said he had no reason to doubt that the signatures were anything but authentic.
[31] Tom no longer had a record of the original incoming email. Tom’s affidavit stated that communications between him and Chris were mainly electronic, via email, on email accounts that were hosted on iSee’s email server. But his “iSee” email account was terminated in July 2016, and he has no records of those emails unless they were copied to his personal email address. None of this evidence was challenged during Tom’s cross-examination, nor was there other evidence as to how Tom received the Guarantee signed by the others.
[32] There were witnesses to the guarantors’ signatures. An individual by the name of Ian Walker purportedly witnessed Chris’ signature, and a Scott Cowan purportedly witnessed Jaze’s and Gino’s signature. There was no evidence from any of these purported witnesses.
[33] In his affidavit and oral testimony, Chris denied signing the Guarantee and testified that the signature is not his. He further states that the witness to his signature, Ian Walker, is a man who he did not meet until December 2017 in Vancouver.
[34] The defendants filed an expert report of Nathalie Bureau, who also gave oral evidence at trial. She is a certified Document Examiner. She is a member of the International Association of Document Examiners and the Scientific Association of Forensic Examiners. She has testified in other court and tribunal proceedings as a qualified expert in the field of handwriting analysis. I similarly found her qualified to give expert evidence in this area. Ms. Bureau acknowledged her duty to give unbiased and objective opinion evidence.
[35] The defendants provided Ms. Bureau 14 known specimens of Chris’ signature, ranging in date from 2012 to 2021. She compared them to the questioned signature in the Guarantee. She asked for an original version of the questioned signature but was advised that it was not available.
[36] Pursuant to the standards of the Scientific Working Group for Forensic Document Examination (“SWDOC”), she conducted the following analysis. First, she magnified and compared the 14 samples to identify consistencies in the manner in which Chris normally signs documents. She then compared the known samples with the questioned signature. She examined the signatures for line quality, pressure patterns, rhythm, slant, size and proportions, utilization of space and spatial alignment, initial and terminal strokes, writing speed, legibility, skill level, letter forms, types of connectors, method of construction, and pattern formations.
[37] Ms. Bureau was of the opinion that the purported signature of Chris on the Guarantee was not written by the same person who wrote the sample signatures. She found that unlike the sample signatures provided, the questioned signature (a) was not in a continuous stroke, (b) had some letters that did not have typical strokes that appeared in the sample documents, (c) had an added tail that did not match with the sample documents, and (d) had qualities which suggested a slower pen movement.
[38] I was assisted by Ms. Bureau’s expert evidence. While there appeared to be some similarities between the questioned signature and other samples of Chris’ signature in evidence, I could also see that they were not identical. Ms. Bureau was able to explain the differences in the signatures and their quality. Based on Ms. Bureau’s evidence and my own assessment of the signature, I find that on a balance of probabilities the signature on the Guarantee was not written by Chris.
[39] In Gino’s affidavit and in his testimony, he also denied signing the Guarantee and said the signature on the document was not his. In his affidavit, he said that he “had no clue who Scott Cowan is” and that he had never met him.
[40] On cross-examination, Gino’s testimony lacked credibility and reliability. He was argumentative throughout. He refused to answer questions on several occasions and only answered when directed to do so by me. At one point, he indicated he would simply answer “no” to all questions. Sometimes, rather than answer proper questions, he would offer his views on the theory of this case.
[41] During his cross-examination, Gino was taken to newspaper articles from 1989. Those articles recounted how Gino and a co-accused, Bradley Scott Cowan, had been charged, convicted, and sentenced for forging cheques while managing a restaurant business in Windsor, called “Boston Sea Party”. Those news reports said the restaurant was owned by a Bradley Scott Cowan. Gino attempted to explain that he knew this individual as Bradley Cowan and not as Scott Cowan, as a rationale for why in his affidavit and in his testimony, he said he did not know a Scott Cowan.
[42] The plaintiff called a further witness, Nancy Whittaker, who used to work at the Boston Sea Party restaurant. Her evidence was that she knew the owners of the business as Gino and “Scott Cowan” and that she saw them in the presence of each other. During her testimony, she remembered that Mr. Cowan was called Scott, but she could not remember if Gino called him Bradley or Scott.
[43] While I did not find Gino’s testimony credible, I cannot conclude that the signature purported to be his on the Guarantee is in fact his. There was no evidence of other signatures of his to allow me to compare signatures. Given my finding that Chris’ signature was not his, this would suggest that there is a likelihood other signatures on the document were also forged.
[44] Jaze also submitted an affidavit and testified. He was a shareholder of iSee. His affidavit states that it appears his signature on the Guarantee is the digital signature that he uses to sign documents electronically. In his affidavit, he does not deny attaching his electronic signature. Like Gino, his affidavit states he has “no clue who Scott Cowan is and [he does] not recall ever meeting this individual.” He also deposed that he has “no clue who Ian Walker is”, the individual who purportedly witnessed Chris’ signature.
[45] During his testimony, Jaze could not explain the apparent forged signature. He was introduced to Chris through Gino. He said that he worked closely with Gino.
[46] While generally I found Jaze to be a credible witness based on his demeanour, his testimony was vague which he attributed to the passage of time. I was surprised that he was unable to shed any light on a prior accusation that Chris had laid against Jaze in an email to his lawyer, Mr. Tibolla, about Jaze or Gino forging Chris’ signature with respect to an office leased by iSee. One would expect an accusation of forgery to be something that one would remember, unless it was common within his business dealings with Chris and Gino. Furthermore, Jaze’s affidavit in which he said his signature appears to be a digital signature, does not reconcile with my observation of other signatures of his on documents that were attached to the Guarantee and purportedly signed the same day. After I examined them closely, those documents show a signature that is different from the one on the Guarantee but were purportedly signed the same day. Jaze’s other signatures are not the same as the one on the Guarantee. For these reasons, I am not satisfied that Jaze’s evidence was credible or reliable.
[47] Since Chris is the sole officer and director of iSee, he would be in a better position, if not the sole position, to produce copies of emails exchanged to evidence what transpired. However, Chris did not adduce those emails into evidence. In his affidavit sworn February 2, 2021, he explained:
I do not have copies of all emails exchanged between Tom and me. Due to how old they are, they simply do not exist.
Prior to this action, I did not have copies of any loan documents that were allegedly signed by me. I believed all signed documents were in the possession of Tom.
I do not have any original documents that the Plaintiff can inspect.
[48] In my view, I am entitled to draw a negative inference from the fact that Chris and iSee did not preserve electronic documents. Chris did not present any evidence explaining why he cannot retrieve them, other than they are old and “simply do not exist”. He could have explained why they no longer exist, offered an explanation of his efforts to retrieve or restore them, or led evidence of a computer technician explaining why they cannot be retrieved. This leads me to question the veracity of his bald assertion, which benefits him, as to why those emails no longer exist.
[49] There was evidence of another document – a Working Capital Application from a company called Money on Tap Inc. – that was purportedly signed by Chris. It appears to be an application for financing for $175,000 USD, dated January 21, 2016. It was produced to the defendants before the trial and Chris had seen it through his lawyer. On Chris’ cross-examination, he denied having seen this document before, other than through his lawyer, and he denied that the signature on it was his. Chris admitted that he has not conducted any investigations or inquiries into who might be signing documents on his behalf. He also stated that he has no information or knowledge about other documents that might be signed on his behalf.
[50] This document was not admitted in evidence in chief by any of the witnesses. Its authenticity has not been established. For this reason, I place little to no stock in this piece of evidence. However, I do place weight on Chris’ answer on cross-examination that he has not investigated or inquired into documents that others might be signing on his behalf.
[51] The evidence does establish that there was at least one other document purportedly signed on Chris’ behalf that Chris knew about. During his cross-examination, Chris was taken to an email he sent to his lawyer, Mr. Michael Tibollo, dated August 18, 2016. This email related to a purported lease entered into for a Toronto office by iSee. In his email to his lawyer, Chris stated “My uncle and Jaze has forged my signature. I don’t have anything to do with this. Please call me ASAP.” When asked whether he brought this prior forged signature to the attention of Tom, Chris stated he could not recall.
[52] Based on this evidence, I am satisfied that Chris knew that Jaze and/or Gino were forging Chris’ signature, and that he took no steps to address it. Chris offered no evidence of what he did to restrain Jaze and/or Gino from forging his signature. In this action, the defendants have not brought a third-party claim against Jaze or Gino alleging that they were responsible for this forged signature. I also consider Gino’s admission of his prior conviction from forging cheques. This evidence, taken in its totality, leads me to conclude on a balance of probabilities that Chris authorized, approved, condoned or acquiesced in having others sign documents on his behalf. I also conclude that it is more likely than not that Jaze or Gino forged Chris’ signature on the Guarantee, and that they did so with his express authorization, implicit consent, or willful blindness. His failure to name them as third parties suggests that he was complicit in their forgery. In my view, in these circumstances, it would be unfair and unjust for Chris to escape liability, and to leave the plaintiff without recourse in collecting on the Guarantee it required.
[53] Given other evidence of the surrounding circumstances in which the Guarantee was entered into, I am further satisfied that Chris had a settled intention to guarantee to Web Objective payment of the $50,000 loan plus 12% interest as set out in the Guarantee, dated April 30, 2016, between himself and Web Objective.
[54] First, Tom entered into evidence the final page of a partially signed Guarantee that was identical to the final page of the Guarantee Tom had signed on behalf of Web Objective. The only difference was that this Guarantee was in favour of Tom personally, and not Web Objective. This document was prepared by iSee’s lawyer and sent in a covering email from that lawyer to Tom on May 6, 2016. Chris signed this page. He admitted that the signature on this page was truly his.
[55] In my view, this evidences that Chris had an intention to personally guarantee the loan advanced by Web Objective through Tom. iSee only received one loan from Tom and Web Objective. Tom, as the sole officer and director of Web Objective, and Web Objective were one and the same for practical purposes, a fact which Chris acknowledged in his cross-examination. Therefore, these surrounding circumstances evidence an intention by Chris to personally guarantee to Web Objective the loan that Web Objective provided. When Chris was asked why his signature appeared on this page, he offered no explanation that would run counter to this conclusion. If a different conclusion were reached, in my view, it would lead to a commercial absurdity given the surrounding circumstances.
[56] Second, there was a string of messages from WhatsApp between Chris, Tom, and a further individual by the name of Wayne entered as an exhibit. On August 2, 2016, these individuals were discussing renegotiating a business deal with BRK. Chris stated:
You both know that Gino and Jaze are not going to convince them to undo what happened. But that still doesn’t help in the mid term. Your money is secured by our personal guarantees basically me not the other two degenerates but how can do anything when my hands are tied…. [emphasis added].
[57] When asked about his statement that “Your money is secured by our personal guarantees…” Chris failed to provide a credible answer that would lead me to conclude that he did not personally guarantee payment to Web Objective. He explained that a lot was going on at the time with respect to BRK. However, he confirmed that BRK had not invested in iSee and there was no personal guarantee with respect to BRK, so no conclusion can be made that this statement was about a personal guarantee for any amounts BRK loaned. He also acknowledged that the reference to “you both” was in relation to Tom and Wayne.
[58] Given this text message, which Chris accepted as his, the fact that only Web Objective (and not Tom) had advanced money to iSee, and in the absence of any other credible explanation as to what these words may have meant, I am left with no other conclusion than that the words mean what they say. Namely, that Chris did personally guarantee the indebtedness owed to Web Objective.
[59] And third, there was evidence of other guarantees that Chris had signed, or which were drafts, that were identical to the one purportedly signed by Chris in favour of Web Objective. All were prepared by the same lawyer at iSee. One was in favour of another lender, Timo Bourikas, dated May 22, 2016. It similarly had an interest rate of 12% per annum. The second one was a draft that showed Tom and another individual, Mike Anobile, as the lenders, which also had an interest rate of 12% per annum. These Guarantees, all prepared by iSee’s lawyer, evidence the terms of the Guarantee that were to govern when lenders sought personal guarantees in relation to loans made to iSee. I find that they provide evidence of the terms of the Guarantee that was to govern the personal Guarantee provided to Web Objective, including the 12% per annum interest rate.
[60] For these reasons, I find that Chris is personally indebted to Web Objective under the Guarantee, dated April 30, 2016, for the amount of $50,000, plus interest at 12% per annum. As of the commencement of trial on December 16, 2021, this amount totalled $91,425.40.
[61] I therefore grant judgment in the amount of $91,425.40 payable by Christopher Stramacchia to Web Objective.
[62] Post-judgment interest is fixed at 12% per annum, pursuant to the terms of the Guarantee.
Costs
[63] Parties have uploaded a Bill of Costs to CaseLines. Parties may deliver 2 pages of costs submissions, double-spaced, to my assistant. The plaintiff shall deliver its submissions within 14 days. The defendants shall have 14 days thereafter to delivery any responding submissions. The plaintiff may deliver reply submissions 7 days thereafter.
Justice M. Sharma
Released: February 1, 2022
COURT FILE NO.: CV-19-00617420
DATE: 20220201
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
WEB OBJECTIVE INC.
Plaintiff
– and –
CHRISTOPHER STRAMACCHIA and ISEE AUTOMATION INC.
Defendants
REASONS FOR JUDGMENT
M. D. Sharma J.
Released: February 01, 2022