COURT FILE NO.: CV-18-00590295-0000

DATE: 20240228

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

KYOUNG HWA LEE and YOUNG SEA GUAK

Plaintiffs

– and –

MYOUNG JA CHANG a.k.a. MYOUNGJA CHANG a.k.a. MYOUNG-JA CHANG a.k.a. MYOUNG JA YOON a.k.a. MYOUNGJA YOON a.k.a. MYOUNG-JA YOON and KWANG EUI CHANG a.k.a. KWANGEUI CHANG a.k.a. KWANG-EUI CHANG and JI YOUNG CHANG a.k.a. JENNY CHANG a.k.a. JENNY JI YOUNG CHANG a.k.a. JI-YOUNG CHANG and BO YOUNG CHANG a.k.a. BONNIE CHANG a.k.a. BONNIE BO YOUNG CHANG a.k.a. BO-YOUNG CHANG

Defendants

Sang Joon Bae, for the Plaintiffs

Jimmie Z. Chen and Steven Hong, for the Defendants

HEARD: March 6, 7, 8, 9, 10, 2023; May 8 and 9, 2023; July 10, 2023, Remote Hearing

a.p. ramsay j.

I. Overview

[1] This action involves two families. The plaintiffs are residents of the Republic of Korea. The defendants immigrated from Korea to Canada in early 2000. The plaintiffs sent their daughter to Canada to attend school. The defendants agreed to provide room and board to the daughter for over a decade. Both families had forged a professional connection in Korea. The defendant father provided art lessons to the plaintiff mother and her young daughter. The art lessons continued for their daughter after she moved in with the defendants.

[2] The plaintiffs collectively submit that the defendants borrowed money from them over the course of over a decade and have failed to pay their debts, despite their assurances. The plaintiffs say that they also advanced funds to the defendant parents for two investments: the first, an investment in the defendants’ residential property in 2001, and the second, an investment in a townhouse venture organized by a non-party, Moon Ho Yim, in 2004. The plaintiffs allege they were lied to about the timing of the sale of the properties involved. The plaintiffs say they advanced funds to the defendants between 1999 to 2011 as either loans or investments.

[3] The defendants say that the monies advanced were payment in exchange for homestay services provided to the plaintiffs’ daughter, save for the Hyundai credit card loans (the “Hyundai Capital Loan”), which they say were incurred by the defendant mother with the consent of the plaintiff mother, and is a nominal amount. The defendants say that the plaintiffs sporadically transferred money to them for various expenses for the plaintiffs’ daughter, including homestay, art lessons, tuition, and guardian fees. The defendants say that the plaintiffs’ claims are statute barred. The defendant mother accepts responsibility for a nominal amount outstanding on the Hyundai Capital Loan, but contends the action is stayed as she filed for bankruptcy. The defendants seek legal and equitable set-off of the accommodation expenses against the plaintiffs’ claims.

II. Nature of the Action

[4] The statement of claim was issued on January 18, 2018, in Toronto.

[5] The plaintiffs Kyoung Haw Lee (“Mrs. Lee”) and Young Sea Guak (“Mr. Guak”) bring this action against the defendant parents, Myoung Ja Chang (“Mrs. Chang”) and Kwang Eui Chang (“Mr. Chang”), as well as their children, Ji Young Chang (“Jenny”) and Bo Young Chang (“Bonnie”), seeking “general damages” in the sum of $533,454.54 for breach of contract, fraudulent misrepresentation, deceit, unjust enrichment, money had and received, breach of fiduciary duty, and fraudulent conveyance.

[6] The plaintiffs also seek an order for equitable relief, from the proceeds of sale of the property municipally known as 206 Cummer Avenue (the “Cummer House”), sold by the defendants Mr. and Mrs. Chang on October 20, 2016, and a declaration that the sale proceeds are held in constructive trust for the plaintiffs. The plaintiffs seek aggravated and exemplary damages in the amount of $200,000, punitive damages in the sum of $200,000, and unspecified special damages.

[7] The plaintiffs seek the same relief against the defendants Jenny and Bonnie, save for the amounts for aggravated, exemplary damages and punitive damages, which is in the sum of $100,000.

III. The Parties and Cast of Characters

[8] The plaintiffs Mrs. Lee and Mr. Guak are married. They are residents of Seoul, Republic of Korea. Their daughter, You Jin Guak (“Yoojin”), who is not a party to these proceedings, participated in the homestay services offered by the defendants for approximately 11 years.

[9] The defendants, Mr. and Mrs. Chang (collectively, the “Changs”), were married and previously resided in Toronto, Ontario. Mrs. Chang now lives in Calgary, Alberta, and Mr. Chang lives in Seoul, Republic of Korea. Their two daughters, Jenny and Bonnie, are named as party defendants. Moon Ho Yim was the legal guardian of Yoojin during her stay in Canada. Mr. Yim is not a party to the proceedings.

IV. Background

[10] Mrs. Lee first met the Changs at Mr. Chang’s art class in Seoul, Korea in 1998. Mr. Chang taught art lessons to both Mrs. Lee and Yoojin.

[11] In 2000, the Chang family immigrated to Canada. They agreed to take Yoojin with them so she could pursue her education. In June 2000, Yoojin arrived in Canada as a homestay student and boarded with the defendants. She remained with the defendants for over a decade. Yoojin continued to receive art lessons from Mr. Chang during her stay in Canada.

[12] Yoojin was 12 years old when she came to Canada for the homestay program. She lived with the defendants for approximately 11 years before returning to Korea.

[13] During the homestay in Canada, Yoojin graduated from middle school, high school, and the Ontario College of Art & Design University (“OCAD”). At the time of the trial, she was a freelance illustrator and designer in Korea.

[14] The plaintiffs made a series of wire transfers to the defendants from 1999 to 2010. The plaintiffs say two of the advances were for investments, and the balance were loans to the defendants. The defendants acknowledge a credit card loan debt and that one of the advances related to monies to be invested into a real estate venture with a third party, but they maintain that the balance of the funds advanced were for various expenses related to the plaintiffs’ daughter including homestay fees, art lessons, tuition, and guardian fees.

[15] Yoojin was raised with the defendants’ daughters Jenny and Bonnie. During her stay with the defendants, the plaintiffs wired some funds to the defendants for expenses. The defendants paid Mr. Yim, who was more fluent in English, to act as Yoojin’s legal guardian. Mr. Yim was the architect of a venture involving four investors, including Mrs. Chang, who purchased a townhouse as a potential income-generating property. Mrs. Chang invested money which came from Mrs. Lee. The venture failed after about six months with a modest loss to investors. Certain investors wanted the return of their money; the townhouse required renovations which would have delayed renting the property in less than a year. The parties dispute whether the plaintiff mother was aware of the outcome and directed the defendants to keep the funds to apply to their daughter’s expenses.

[16] The parties agree that the plaintiffs transferred the following sums to the defendants, Mr. and Mrs. Chang, between 1999 to 2008, as follows:

i. 1999: $10,000

ii. 2001: $100,000

iii. 2002: $18,000

iv. 2004: $25,000

v. 2007: $20,000

vi. 2008: $10,000

[17] The plaintiffs’ daughter returned to Korea in July 2011.

[18] On October 20, 2016, the defendants sold the Cummer House. Mr. Chang returned to Korea in 2016; he and Mrs. Chang have been living separately since 2016.

[19] The plaintiffs forwarded a demand letter to the defendants dated August 21, 2017 (the “Demand Letter”). Mrs. Lee now asserts that the Demand Letter omits loans, includes amounts which are not loans, and mischaracterizes two items as “loans” when they should have been identified as “investments.”

[20] Mrs. Chang filed for bankruptcy in September 2017.

V. The Issues

[21] The issues to be determined in this case are:

i. Have the plaintiffs established that the funds transferred in 1999, 2002, 2007 and 2008 were debts?

ii. Have the plaintiffs established that the $100,000 transfer from 2001 was an investment?

iii. Have the plaintiffs established that the $25,000 investment from 2004 was not repaid?

iv. Are the plaintiffs’ claims statute barred?

v. Are the defendants entitled to legal and equitable set off?

VI. Procedural Issues

[22] There were several procedural issues which arose during the trial, which are addressed below.

A. Evidence at trial

[23] The evidence in chief of the witnesses was provided primarily by way of affidavit. The parties filed an agreed statement of facts. The witnesses testified virtually, and the trial was interpreted from Korean to English and vice versa.

[24] Where the affidavits contain evidence that would be inadmissible as oral testimony at trial, that is, information that is not in the personal knowledge of the deponent, a reference to hearsay, in the absence of any agreement by the parties, from documents not proved, or a reference to the discovery evidence of the adverse party, I have considered whether the evidence would have otherwise been admissible if the witness gave viva voce evidence at trial, even in the absence of an objection to the evidence and which includes any document annexed to the affidavit of a deponent that cannot be proven by that witness.

[25] The following witnesses testified at the trial:

i. Mrs. Lee

ii. Mr. Guak

iii. Yoojin Guak

iv. Moon Ho Yim

v. Mrs. Chang

vi. Mr. Chang

vii. Bonnie Chang

viii. Jenny Chang

B. Judicial notice of homestay

[26] The defendants have asked the court to take judicial notice of the homestay services for international students studying in Canada. The defendants state that it is common for Korean families to send their children to study abroad to live with a family in a foreign country to attend school, especially in Canada. In exchange, the family caring for the child would receive a payment for providing the “homestay service.” The defendants argue that this service would normally include full care of the child.

[27] The plaintiffs do not consent to the court taking judicial notice of the cultural aspect of the homestay.

[28] I am inclined to take judicial notice of the homestay service in Canada for the reasons below.

[29] Courts should take judicial notice of facts which are known to intelligent persons generally: R. v. Spence, 2005 SCC 71, [2005] 3 S.C.R. 458, at para. 49; Reference re Alberta Statutes, 1938 CanLII 1 (SCC), [1938] S.C.R. 100, at p. 128; Montréal v. Arcade Amusements Inc., 1985 CanLII 97 (SCC), [1985] 1 S.C.R. 368. In R. v. Find, 2001 SCC 32, [2001] 1 S.C.R. 863, at para. 48, the Supreme Court of Canada set out the guiding principles for a court to consider when asked to take judicial notice of facts. The indicated judicial notice may apply in the following instances, where the facts are:

(1) so notorious or generally accepted as not to be the subject of debate among reasonable persons; or (2) capable of immediate and accurate demonstration by resort to readily accessible sources of indisputable accuracy: R. v. Potts (1982), 1982 CanLII 1751 (ON CA), 66 C.C.C. (2d) 219 (Ont. C.A.); J. Sopinka, S. N. Lederman and A. W. Bryant, The Law of Evidence in Canada (2nd ed. 1999), at p. 1055.

[30] Justice Brown of the Ontario Court of Appeal summarized the general principles drawn from the authority which underpins the concept judicial notice in R. v. J.M., 2021 ONCA 150, 154 O.R. (3d) 401, at para. 31, stating, as follows:

The basic principles regarding the substantive dimension of judicial notice can be summarized as follows:

(i) Judicial notice is the only exception to the general rule that cases must be decided on the evidence presented by the parties in open court: David M. Paciocco, Palma Paciocco & Lee Stuesser, The Law of Evidence, 8th ed. (Toronto: Irwin Law, 2020) ("Paciocco"), at p. 573;

(ii) Judicial notice involves the acceptance of a fact or state of affairs without proof: R. v. Williams, 1998 CanLII 782 (SCC), [1998] 1 S.C.R. 1128, at para. 54; Sidney N. Lederman, Alan W. Bryant & Michelle K. Fuerst, Sopinka, Lederman & Bryant: The Law of Evidence in Canada, 5th ed. (Toronto: LexisNexis Canada, 2018) ("Sopinka") at §19.16;

(iii) Facts judicially noticed are not proved by evidence under oath; nor are they tested by cross-examination: R. v. Find, 2001 SCC 32, [2001] 1 S.C.R. 863, at para. 48;

(iv) Since judicial notice dispenses with the need for proof of facts, the threshold for judicial notice is strict: Find, at para. 48; and

(v) Judicial notice applies to two kinds of facts: (a) those that are so notorious or "accepted", either generally or within a particular community, as not to be the subject of dispute among reasonable persons (R. v. Mabior, 2012 SCC 47, [2012] 2 S.C.R. 584, at para. 71; Reference Re Alberta Statutes, 1938 CanLII 1 (SCC), [1938] S.C.R. 100, at p. 128; Sopinka, at §19.18); and (b) those that are capable of immediate and accurate demonstration by resorting to readily accessible sources of indisputable accuracy (Quebec (Attorney General) v. A., 2013 SCC 5, [2013] 1 S.C.R. 61, at para. 238; Sopinka, at §19.16). The sources may include both large bodies of scientific literature and jurisprudence: R. v. Paszczenko, 2010 ONCA 615, 103 O.R. (3d) 424, at paras. 65-66.

[31] The defendants indicate that the court may take contextual judicial notice of homestay to provide context to assist the court in making a case-specific finding of fact. The closer a fact approaches the dispositive issue, or the closer it is to the center of the controversy between the parties, the more stringently the court ought to verify it before taking judicial notice of it: Spence, at paras. 60-61; Quebec (Attorney General) v. A., at para. 239.

[32] While I am prepared to take judicial notice of the existence of homestay for international students, I am not inclined to go so far as to extend this consideration to Korean families, as this appears to be an issue of dispute between the parties. The plaintiffs do not dispute, however, that the plaintiffs’ daughter was a homestay student with the defendants for over a decade.

[33] Mr. Yim acted as the guardian for Yoojin. At the time, he was a guardian for four to six students. He was paid directly by Mrs. Chang for acting as a guardian and was paid each year until Yoojin reached the age of majority. Mrs. Lee says that she paid $2,000 towards the guardian fee. She made enquiries and was aware other parents paid as much as $4,000 a year for a guardian fee. Yoojin herself admits to being one of the homestay students who boarded with the defendants.

[34] On the other hand, the defendants have presented the court with information regarding homestay for international students studying in Canada. The Toronto District School Board’s (“TDSB”) website provides information about the “Homestay” arrangements and, while the site indicates the TDSB does not recommend any agency, it provides three organizations for families to find homestay arrangements. In contrast, the Toronto Catholic District School Board has five recommended homestay providers. A federal government website refers to homestays,^1 and any income earned from accommodation sharing is taxable by the federal government. In the result, I agree with the defendants that “homestay” is so notorious or accepted generally as a means of accommodation for international students studying in Canada as not to be the subject of dispute among reasonable persons.

[35] I agree with the plaintiffs however that the court cannot take judicial notice of the cultural aspect of homestay amongst the Korean community. The defendants have not presented any evidence to the court to show that this is a fact that is so notorious or "accepted" generally or within the Korean community that it is not the subject of reasonable dispute for the purpose for which the defendants are presenting it; nor have the defendants presented any sources which establishes the indisputable accuracy of these facts.

C. Admissibility of surreptitious recording

[36] The plaintiffs wish to rely on a transcript of a recorded telephone conversation between Mrs. Lee and Mrs. Chang on January 2, 2017. Mrs. Lee recorded the conversation without Mrs. Chang’s knowledge or consent. The plaintiffs submit that it was not illegal to record the conversation and argue that the transcript is relevant, and the probative value is high. The conversation was translated from Korean into English and is accompanied by an affidavit of the interpreter.

[37] The admissibility of a one-sided recording without the consent of a party is ultimately up to the trier of fact based on a test of its probative value.

[38] The plaintiffs rely on Zucchiatti v. Griffiths (1989), 1989 CanLII 8782 (ON SC), 20 R.F.L. (3d) 93 (Ont. Dist. Ct.), where notes were admitted into evidence from a private journal. While I need not determine whether the recording was illegally obtained, I note that pursuant to s. 184 of the Criminal Code, R.S.C. 1985, c. C-46, the interception of a private telephone conversation without the consent of the person who initiated the conversation, or the person who was intended to receive it, would be an offence. However, at common law, even evidence obtained improperly or illegally may still be admissible: see, Sopinka et al., The Law of Evidence, 5th ed. (LexisNexis, 2018) at 9.1; see also Fiorito v. Wiggins, 2015 ONCA 729, 69 R.F.L. (7th) 5, at para. 22.

[39] The court still has discretion to exclude evidence that is relevant, material, and not barred by any specific admissibility rule under the cost-benefit analysis if its probative value is overborne by its prejudicial effect, if it involves an inordinate amount of time to present the evidence that is not commensurate with its value, or if it is misleading in that its effect on the trier of fact is out of proportion to its reliability as probative material: R. v. Cyr, 2012 ONCA 919, 294 C.C.C. (3d) 421, at paras. 96-97; R. v. Mohan, 1994 CanLII 80 (SCC), [1994] 2 S.C.R. 9, at p. 21; Rudin-Brown et al. v. Brown, 2021 ONSC 3366, 155 O.R. (3d) 750, at paras. 28-30; and Maghakian v. Takaoka, 2022 ONSC 2004, 41 R.P.R. (6th) 251, at para. 75. The authority is divided on the admissibility of such a recording.

[40] Section 125(2)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43, requires that:

(b) documents filed in courts shall be in the English language or shall be accompanied by a translation of the document into the English language certified by affidavit of the translator. R.S.O. 1990, c. C.43, s. 125.

[41] This is not a case related to the admissibility of the actual recording, but rather the transcription. An affidavit of the translator, Mr. Seungkon Yoo, was sworn on December 15, 2017. Mr. Yoo deposes that he is “proficient” in Korean and English. Mr. Yoo does not indicate his accreditation. He does not indicate that he is a certified translator. His qualifications are not indicated. Mr. Yoo’s affidavit does not say that the translation is an accurate version of the original text but rather that the document “is a fair and accurate translation” (emphasis added). The accuracy of the translation was a live issue at the trial. The reliability of the translation is in doubt. Mrs. Lee deposes that: “I recorded this telephone conversation and transcribed same by Transcriber.” She made the transcription an exhibit to her affidavit but does not deal with the content of the transcription in her affidavit.

[42] At the trial, both Mrs. Lee and Mrs. Chang testified that the translation is incorrect with regards to the mention of a “loan” and “debt obligations,” which appears in the English translation but not in the original Korean transcript. Mrs. Chang confirmed that $100,000 was given to her. She did not agree that $100,000 was lent to her as appears in the English translation.

[43] In my view, aside from the questionable accuracy of the translation, the proffered evidence is fraught with ambiguity and does not amount to an admission, as the plaintiffs assert, of the debts claimed in this action. The defendants point out that Mrs. Lee consistently speaks to a debt which the defendants readily admit to, that is, the Hyundai Capital Loan, but there is no admission to any other debts. In my view, the translated version of the transcript is not reliable, relevant, nor probative of any issues to be determined before me.

[44] Certainly, there is no evidence before the court that Mr. Yoo listened to the recording, and certainly, he did not certify that the document translated into English was a certified transcription of the recording. As the trial comes down to the credibility of the witnesses, this is a significant factor. At its highest, the document indicates that Mrs. Chang acknowledged that she owed Mrs. Lee money. In the result, even though the evidence was adduced at trial, it is not probative as to the existence of the impugned loans and investment.

VII. Evidence of Witnesses

Kyounghwa Lee

[45] As with all the witnesses, it is understandable that some memory of the events would have faded given the passage of time. Mrs. Lee, though, appears to have excellent recollection about conversations with various individuals, but on cross-examination repeatedly skirted answering direct questions. This would be a neutral factor in assessing her credibility given the challenges with using an interpreter, and, in the result, I assess her credibility based on the implausibility of some of her testimony, and the apparent contradiction, at times, of her evidence, the documentary evidence, and even her husband’s evidence.

[46] She says that it was the defendants who suggested that they take her daughter to Canada to continue teaching painting and permit her to learn English and about Canadian culture. She and her husband agreed and wired funds for one year of living expenses and tuition payments in April and June 2000. She had discussions with Mrs. Chang about a move and the defendants’ need for more cash to purchase a home. They spoke about the increasing value of residential houses, and she says Mrs. Chang made several representations including that the Cummer House was on a big lot, a townhouse could be built on the land, and a lot of profit could ensue when it was sold. She and her husband decided to invest in the Cummer House.

[47] Mrs. Lee testified on cross-examination that she first met Mr. Yim in 2000. She had met him a number of times before 2004. In 2004, she was aware of the investment being proposed by Mr. Yim. She testified that Mrs. Chang suggested that she invest in the property. She borrowed $25,000 from the bank to make the investment, which was a lot of money for her family at the time. She did not know when the property would be sold. From October 2004, she would ask Mrs. Chang how the investment was progressing.

[48] She says that she now knows that Moon Ho Yim was organizing the investment.

[49] On cross-examination, she conceded that she was aware in 2004 that Mr. Yim was the organizer of the investment. She testified that she did not follow up with him because she trusted the defendants. She believes she had his contact information. For his part, her husband Mr. Guak testified that Mrs. Chang suggested the investment to Mrs. Lee, who then asked him. He got to know Mr. Yim through his wife. He trusted Mr. Yim with the investment. He travelled to Canada but did not meet with Mr. Yim. He did not know when the investment property was to be sold. He never enquired about the investment. He was not concerned about the investment. Mrs. Lee did not lend the defendants any other funds in 2004, but she sent her daughter’s “pocket money, tuition fee, etc.” In 2007, she made enquiries about the investment property.

[50] Over the years, Mrs. Lee made a number of payments to Mrs. Chang. She says she was persuaded by Mrs. Chang to get involved in Mr. Yim’s townhouse venture. Over the years, she enquired about the investments and the loans and was assured that they would be repaid. She loaned the defendants money in 2007 and 2008 to repair the Cummer House.

[51] In early August 2010, she gave her three credit cards to Mrs. Chang and her daughters. They used the cards and borrowed money from the card. Mrs. Lee made partial payments on the Hyundai Capital Loan. In early 2011, she and her husband refused to extend further loans to Mrs. Lee and her family. Mrs. Chang stopped paying the credit card loans in August 2012. She did not respond to Mrs. Lee’s attempts to contact her from early 2013 to June 2014.

[52] She had several interactions with Mrs. Chang over the years in which she would enquire about the investments and ask that the “outstanding loan be paid.” In 2016, when her daughter was getting married, she demanded payment of $50,000. She did not know until November 2016 that the defendants had sold the Cummer House. When she confronted Mrs. Chang, she did not believe what she was telling her. She recorded a conversation with Mrs. Chang and exchanged text messages with her. She sent the Demand Letter, drafted by her daughter, which she reviewed, in August 2017.

[53] Mrs. Lee says after Mrs. Chang filed for bankruptcy, she realized that she had to take legal action. She says she had had some hope that the defendants would make repayment of at least the principal amount owed, but when she received the bankruptcy notice, she realized that it would not happen unless she and her husband obtained a judgment against them.

[54] The plaintiffs filed a notice of intended opposition to discharge of bankrupt on May 30, 2018.

Young Sea Guak

[55] Mr. Guak was a public service personnel over 35 years. He retired in December 2013. He reviewed his wife’s affidavit before completing his own affidavit.

[56] Mr. Guak says the defendants owe them $533,454.54. Mr. Guak says that his wife spoke to him before lending money to the defendants, except he did not know about the Hyundai Capital Loan or the $18,000. He had met the defendants through his wife. On cross-examination, he testified that he thought they would be repaid the 1999 loan within two or three years. He borrowed the $100,000 and was paying interest on the loan. He was not expecting to be paying interest on the loan indefinitely. He found out about the Hyundai Capital Loan while preparing for the lawsuit. He saw the Demand Letter before it was sent out.

[57] He transferred various funds to the defendants for Yoojin’s tuitions, guardian fees, allowances.

[58] He says that he was in Canada in 2006 and stayed at the Cummer House. He stated in his affidavit: “I stayed at the Cummer House for five days. Myoungja and Kwangeui both told me that the development and the sale of the Cummer House were imminent. I was excited and happy to hear the news. In any event, the Cummer House was not sold then.”

[59] Mr. Guak says he met the defendants a few times in 2008 for meals and was again told the Cummer House would be sold soon. Mr. Chang was in Korea between 2011 to 2012 and stayed with him for a month. He was assured by Mr. Chang that the Cummer House would be sold soon and that he would make a large profit.

[60] Taking the record and evidence before the court on the whole, Mr. Guak’s evidence with respect to the investment is simply not credible. He provides no explanation for the notes made for the other transfers made to the defendants with respect to his daughter, and there is a lack of any notes or communications dealing with the purported investment, from which he was to reap a huge profit. In his affidavit, he stated: “When I made wire transfers between the years 2000 to 2011, I made notes at the time of the transfers.” He further noted: “I have kept this bundle of notes and wire transfer receipts to date.” Mr. Guak does not provide any adequate explanation as to why there are no notes made with respect to other transfers to the defendants, particularly given the amount involved, and for which he was supposedly paying interest.

Yoojin Guak

[61] Yoojin took painting lessons from Mr. Chang during her stay in Canada with the defendants from June 2000 to July 2011, being from grade eight to the middle of her second year of university. She was one of several homestay students who took lessons from Mr. Chang. She claimed Mrs. Chang told the homestay students that art lessons were free to all homestay students who paid room and board. She claimed other boarders paid $100 a month for painting lessons. She believes the maximum dollar value of all lessons she received would amount to $16,800. She returned to Korea permanently in July 2011. In December 2016, her mother asked her to find out whether the Cummer House had been sold. She asked a lawyer to complete the investigation. She drafted the Demand Letter at the request of her mother.

[62] I found Yoojin, in part and with respect to some of the events, to be intentionally vague. While this may be explained by the passage of time, she had a detailed recollection about other events that was helpful to the plaintiffs. She says that she had discussions with the defendants’ daughter in December 2015 “about their parents’ debt to my parents”. She claimed she spoke to them about the investment in the Cummer House. She told them she believed Mrs. Chang stole her mother’s identity to transfer money from her mother’s credit card. However, she does not indicate when she retained a lawyer to assist her in investigating the defendants. From her own evidence, she was aware in 2015 of the purported loans and investment.

Moon Ho Yim

[63] Mr. Yim was the legal guardian to Yoojin. He was paid for his services by Mrs. Chang directly and received $1,000 per year to perform his duties as a legal guardian of Yoojin until Yoojin reached the age of majority.

[64] He acted as a legal guardian of several international students who were staying at the defendants’ residence. There were four or sometimes five Korean international students who were minors at that time, around the years 2000 to 2006. He received about $4,000 to $5,000 per year to perform his duties as their legal guardians, but he did not receive more than $1,000 per student per year.

[65] In 2004, he and three other partners, including Mrs. Chang, purchased a property situated at 12 Mountjoy Avenue, Toronto, Ontario (the “Mountjoy House”). Each investor contributed $20,000 towards purchasing the Mountjoy House with a view to making it a rental property. He was not aware that the money contributed from Mrs. Chang came from the plaintiffs. The Mountjoy House sold in September 2005 at a loss of approximately $5,300 for each investor. On cross-examination he indicated every investor recovered $15,000.

[66] Multiple investors wanted the Mountjoy House to be sold. The property was being renovated and there was an architect involved, and for his work, he was treated as an investor. On cross-examination, Mr. Yim indicated that the construction was a big job but denied that it took longer than expected. In his affidavit, however, he indicated that the construction took longer than expected. He conceded that delay would affect the profits.

[67] Mr. Yim met Mrs. Lee every time she came to Canada in the presence of Mr. and Mrs. Chang. He says he only exchanged greetings with her. He has never discussed the investment with Mrs. Lee. He conceded that he did discuss school and how the children were doing.

[68] In January 2018, Mrs. Chang asked Mr. Yim for documents in connection with the Mountjoy House investment. She apparently told him the money she invested in the Mountjoy House belonged to Mrs. Lee. He never spoke to any of the plaintiffs until after Mrs. Chang called and made inquiries. In his affidavit, he did not specify which plaintiff he spoke to.

Myoungja Chang

[69] Mrs. Chang says that the plaintiffs agreed that they would pay $1,200 per month to the Changs for Yoojin’s homestay, together with $500 for art lessons and other expenses. She says that Mr. Yim charged an annual fee of $5,000 for the legal guardianship of Yoojin. Other expenses included tuition and miscellaneous expenses. The plaintiffs made payments of approximately $428,000 from 2000 to 2011 towards Yoojin’s expenses.

[70] The estimated breakdown provided by Mrs. Chang of the expenses for the duration of ten years was approximately the same amount advanced by the plaintiffs.

[71] Her evidence is that in 1999, the plaintiffs advanced $10,000 to the defendants for art lessons between 1999 to 2001.

[72] Mrs. Chang says that she lied about the sale of the Cummer House because she had many debt obligations to many parties. In 2011, she started a business, Home of Hot Taste, which ultimately failed. She ran into some financial difficulties.

[73] Mrs. Chang admits that she used Mrs. Lee’s credit cards but made periodic repayments of approximately $23,259 of the Hyundai Capital Loan from 2011 to 2014, leaving a balance of approximately $6,741.

[74] After her business failed, she declared bankruptcy, and she was not able to repay the remainder of the $32,000 Hyundai Capital Loan debt. She made an assignment into bankruptcy in 2017.

Kwang Eui Chang

[75] Mr. Chang is a professional art teacher. He provided art lessons to Mrs. Lee and her daughter. The lessons were not free. The plaintiffs agreed to pay a fee for Yoojin’s homestay. He continued to provide lessons to Yoojin after she came to Canada. In 2001, he and his wife purchased the Cummer House as tenants in common. His relationship with his family broke down in 2016, and he separated from his wife. He returned to Korea and gifted his share of the sales proceeds of the Cummer House to his daughters. His wife took care of the finances. He was not aware of any of the financial arrangements between his wife and the plaintiffs. He found out about the debt in August 2017 when he received a text from Mrs. Lee. He apologized to her. He did not know the details of the debts.

[76] Mr. Chang did not have a good recollection of key information, but given the passage of time, it is not surprising.

Bo Young (Bonnie) Chang

[77] Bonnie is the defendants’ oldest daughter. She went with her family to Korea in October 2010. She says she never received nor was in possession of any of the plaintiffs’ credit cards. She is aware her mother asked Mrs. Lee to lend her some money during the visit. She was present when her mother made a call to Hyundai Capital. During the call, she told the company’s agent that her mother was Mrs. Lee and was under the understanding that Mrs. Lee had authorized her mother to do so.

[78] She says she worked for a restaurant opened by her mother in 2011, Home of Hot Taste, as a full-time server from 2011 to 2016, without much compensation, and was owed $240,000 in unpaid wages. When the Cummer House was sold in October 2016, her mother transferred $480,000 of the proceeds of sale to her account. She says the house sold for $537,813.44. She paid off some liabilities and invested in another business.

Yi Young (Jenny) Chang

[79] The defendants’ daughter Jenny says that she and the plaintiffs’ daughter Yoojin, as well as her sister Bonnie, grew up as sisters. Her family immigrated to Canada in 2000. They moved into the Cummer House in 2001. Yoojin moved in with them in 2001. Their relationship broke down in 2016. Yoojin asked her that year whether the Cummer House had been sold, and her mother told her to tell Yoojin that the closing had not yet taken place. She first learned about Mrs. Chang’s credit card debt to the plaintiffs in 2015 or 2016.

VIII. The Alleged Loans and Investments

A. Onus and standard of proof

[80] In a civil case, the onus of proof rests with the plaintiff and it is on a balance of probabilities. The trial judge must scrutinize the relevant evidence with care to determine whether it is more likely than not that an alleged event occurred: H. v. McDougall, 2008 SCC 53, [2008] 3 S.C.R. 41, para. 49.

B. What constitutes a debt?

[81] The issue to be determined by the court is whether various wire transfers made by the plaintiffs, or either of them, created a debt.

[82] A “debt” is defined by Black's Law Dictionary, Fifth Edition (1983), at p. 210, as follows:

A sum of money due by certain and express agreement. A specified sum of money owing to one person from another, including not only obligation of debtor to pay but right of creditor to receive and enforce payment.

A fixed and certain obligation to pay money or some other valuable thing or things, either in the present or in the future. In a more general sense, that which is due from one person to another, whether money, goods, or services.

[83] The above definition from Black’s Law Dictionary has also been adopted in the jurisprudence: see e.g., Central Capital Corp. (Re) (1996), 1996 CanLII 1521 (ON CA), 27 O.R. (3d) 494 (C.A.), at para. 34.

[84] On cross-examination, Mrs. Lee admitted that there was no evidence in writing to support the existence of the alleged loans. She acknowledged that there was nothing in writing from 1999 to 2010. It is not plausible that she would expend a great deal of effort to follow up on the Hyundai Capital Loan but not the earlier alleged loans. The plaintiffs have not established, on a balance of probabilities, that the defendants are indebted to them for these amounts.

[85] The court cannot construct the agreement between the parties. Courts will enforce an oral agreement provided it satisfies the requirement for the formation of a binding contract. The parties must have intended to create legal relations. The parties must have reached consensus on all the essential terms of the agreement. The plaintiffs must prove that they, or any one of them, had a binding agreement with Mrs. Chang with respect to each of the purported loans.

[86] Mrs. Lee was the person who advanced most of the monies to the defendants (or directed her husband to do so), but she was vague and lacked detail regarding each of the alleged loans. She did not specify in any degree of detail what the parties agreed to, including the rate of interest, if any, on each of the amounts said to be a debt, the terms of repayment, and the loan’s repayment period. In the result, the existence of any of the alleged loans depends on the parties’ credibility.

[87] If there was an agreement between her, or any of the plaintiffs, and the defendants, or any of them, that these amounts would be repaid, it does not exist on the evidence.

The 1999 payment

[88] The parties agree that in April 1999, Mrs. Lee advanced $10,000 to Mrs. Chang. The parties disagree on the purpose of the advance. The plaintiffs contend that the 1999 payment was to be repaid in three weeks, and in lieu of interest, Mr. Chang would provide Mrs. Lee and Yoojin with free art lessons.

[89] Mrs. Chang says the money was for art lessons for Mrs. Lee and her daughter. Neither position makes sense, as the funds were advanced while all parties were still in Korea; however, the plaintiffs bear the burden and the plaintiffs’ version of events is even less plausible, even by their own pleadings. At paragraph 10 of the statement of claim, the plaintiffs plead that it was in March 2000 that the Changs told Mrs. Lee that they were immigrating to Canada. On cross-examination, Mrs. Lee testified that she did not pay for art lessons due to this alleged loan, as the interest that was accruing on the loan. Mrs. Lee also says that the costs of the art lessons was included in the boarding fees for her daughter. The defendants point out that the art lessons were approximately $300 per month and point out that the costs of the art lessons, for Mrs. Lee and her daughter, over a period of three years would be approximately $10,000. Mrs. Lee does not dispute that she and her daughter took art lessons from Mr. Chang. She admits that her daughter continued to take those art lessons.

[90] Mrs. Lee admitted that there were no written documents evidencing the loan. Mrs. Lee has given contradictory evidence regarding the interest payments. I agree with the defendants that it makes no sense for the defendants to enter an arrangement where they would provide $10,000 worth of services and also agree to repay a loan of $10,000 to the plaintiffs.

[91] The plaintiffs’ evidence that this was a loan is also at odds with their pleadings and the evidence at trial. On the one hand, the plaintiffs say that the defendants owed them $10,000 in 2000. They do not demand repayment of the loan. Rather, based on their pleadings and Mrs. Lee’s evidence at trial, they advanced money to the defendants to pay for their daughter’s living expenses and tuition. At paragraph 12 of the statement of claim, the plaintiffs plead that they transferred $6,000 to the Changs on April 10, 2000, for one year of living expenses for Yoojin. Both Mr. Guak and Mrs. Lee say that Mr. Guak transferred $6,000 to Mrs. Chang for one year room and board for their daughter. The plaintiffs also plead in their statement of claim that on June 21, 2000, they wired $7,000 to the defendants for their daughter’s tuition. Mrs. Lee also deposes in her affidavit that they wired $7,000 to the defendants for her daughter’s tuition. The defendants are not aware of any funds being transferred into their account, nor do they have any records that money was transferred into their account. These amounts are not part of the claim. Mrs. Lee testified that at the time these funds were advanced, the $10,000 had not been repaid.

[92] Even though these amounts are not being pursued, I note that the evidence relied upon by the plaintiffs to support these transfers is not reliable. Mrs. Lee annexed a document to her affidavit said to be a translated copy of the wire transfer from her husband’s bank book. The official translator, Mr. Yoo, indicated that it is a “Statement of Remittance dated October 17, 2017, written in the Korean language”, which is over seventeen years after the alleged event. Mrs. Lee was not asked about the date on cross-examination. However, she conceded that absent from the document were a beneficiary bank and beneficiary name, in contrast to other bank documents where money was wired to the defendants. She agreed that the record identified other funds being transferred to the defendants and identified the name of the person and the bank she was transferring money to. She agreed that the beneficiary account number did not match any of the other beneficiary account numbers.

[93] Mrs. Lee herself says that she and Mrs. Chang were not close. She did not know why Mrs. Chang wanted to borrow the money from her; nonetheless, she says that she agreed to loan her the money. The details of the repayment terms, agreed upon interest, and terms of the loan cannot be ascertained from Mrs. Lee’s evidence.

[94] Mrs. Lee testified that as she borrowed the money and had to pay interest on the loan, she charged interest on the debt owed by Mrs. Chang; the rate of that interest is unknown. She deposed in her affidavit: “Anyhow I lent her money and Myoungja and I agreed there would be no interest accrued but my daughter and I could take painting lesson from Kwangeui as an interest payment.” On cross-examination, Mrs. Lee admitted that she stopped taking art lessons in 2000. She said nothing about the interest payments, now becoming due, though she was no longer taking lessons. The evidence is not plausible. Mrs. Lee was taking art lessons from Mr. Chang, not Mrs. Chang. She says that her daughter continued to take painting lessons and she was advised by Mrs. Chang that the costs for the painting lessons was included in the room and board costs.

[95] Mrs. Lee testified that in 2002, Mrs. Chang asked for an extension to repay the $10,000 loan made in 1999. There is no documentary evidence of this. I infer from that evidence that any interest accruing on the loan would not be diverted to cover art lessons for either Mrs. Lee or her daughter as of June 2002; I note her daughter came to live with the defendants in June 2002. It is also during this period that the plaintiffs assert that the $100,000 was advanced in 2001, the purpose of which is disputed between the parties, and addressed more fully below, and yet the plaintiffs made no reference to the 1999 debt.

[96] The plaintiffs did advance $10,000 to Mrs. Chang in 1999. There are two versions of events. The plaintiffs have not established, on a balance of probabilities, that there was any agreement between Mrs. Lee and Mrs. Chang to repay that money. The plaintiffs have not established, on a balance of probabilities, that there was any agreement between Mrs. Lee and Mrs. Chang, or any of the plaintiffs, that the defendants, or any of them, agreed that the money be subject to interest, such interest payment to be in lieu of paying Mr. Chang for Mrs. Lee and her daughter’s art lessons.

The 2001 investment of $100,000

[97] After the defendants immigrated to Canada, the Changs purchased the Cummer House. The Chang family lived in this house until it was sold in 2016. The plaintiffs say that they invested $100,000 in the Cummer House. There is no dispute that on February 13, 2001, the plaintiffs wired $100,000 to the defendants.

[98] The plaintiffs also claim interest in an unspecified amount, and state that the interest repayment from the defendants would be sufficient to cover the homestay costs. The plaintiffs claim the terms of this agreement were as follows:

a. They would advance $100,000 to the defendants.

b. Once the Cummer House was sold, the plaintiffs would receive their original investment and “receive a further sum equal to the proportionate increase in the value of the Cummer House over the original purchase price.”

c. Until the Cummer House was sold, and the loan was completely repaid, any homestay fees and art lesson fees for Yoojin would be waived in lieu of paying interest on this loan; and the Cummer House would be sold and developed within five to six years from the purchase date.

[99] The defendants say the $100,000 was paid to them as an advance payment for Yoojin’s room and board and art lessons for five years, at a combined rate of approximately $1,700 per month.

[100] For the reasons below, I find that the plaintiffs have not established, on a balance of probabilities, that the $100,000 advanced to the defendants was an investment in their residential home.

[101] Whatever the agreement was between the parties, the plaintiffs have not established on a balance of probabilities that there was an agreement between the parties that they would invest $100,000 in their residential home, the Cummer House, in exchange for a return of the principal investment and a profit commensurate with the principal invested once sold. There is simply no evidence before the court of any negotiation of an agreement of such terms by the parties. The positions of the parties as to the purpose of the $100,000 is diametrically opposed.

[102] On the evidence, I find that the parties agreed that the plaintiffs’ daughter, Yoojin, would participate in a homestay program, study in Canada, and board with the defendants. Though the details are not entirely clear, there was some agreement between the parties that the plaintiffs would pay for her room and board as well as her living expenses and tuition. While there is a dispute about the cost of Yoojin's room and board, on the evidence before me, I find that at a minimum it was $12,000 a year. I say so based on the plaintiffs own admission at paragraph 12 of their statement of claim that they transferred $6,000 to the defendants for Yoojin's room and board for the year and the fact that Yoojin arrived in Canada in June 2002. Mr. Guak's affidavit does not mention how much he paid for the homestay fee, but on cross-examination he stated that he paid $500 a month for homestay and $2,000 a year for the guardianship fee. The defendants contend that Mrs. Lee agreed to pay room and board in the amount of $1,200 a month, for living and other ancillary costs.

[103] The lack of any communication whatsoever by the plaintiffs enquiring about the nature of their investments, in any form, supports the defendants’ position. Mrs. Lee has communications about the Hyundai Capital Loan and the credit cards. Mr. Guak, her husband, made a note of the purpose of the other wire transfers, but conspicuously absent is a note for the purpose of this disputed amount. The plaintiffs have not established that there was any meeting of the mind regarding any agreement for the $100,000. There is absolutely no written documents or communications that would indicate that this was an investment. This claim also directly contradicts their Demand Letter in which they categorize the 2001 payment as a loan.

[104] On cross-examination, Mrs. Lee testified that she did not have any of the terms of this investment in writing. There are no contemporaneous documents or communications to indicate what the intentions of the parties were, and any agreement arrived at as between the parties. Mrs. Lee indicates that there is an email between 2010 and 2012 which would indicate that it was an investment. Although the plaintiffs claim that the money was an investment in the Cummer House, she deposed that Mrs. Chang represented to her that until the house was sold and the loan was completely repaid, there would be no interest accrued, but her daughter would get room and board as an interest payment. Her affidavit is silent as to the interest rate that the parties agreed to. On cross-examination, Mrs. Lee says that Mrs. Chang did not have money to pay, and suggested the interest payment would cover the homestay fees. This explanation made no sense.

[105] The plaintiffs have not established that there is any oral agreement. In the case of Mrs. Lee, who had the discussions with Mrs. Chang, she has not established any definite terms agreed to by Mrs. Chang, or Mr. Chang for that matter. For a contract to exist there must be a meeting of the minds, or consensus ad idem. The test for whether there is an agreement is objective. The court must consider whether an objective, reasonable bystander would determine, in all the circumstances, that the parties intended to contract. Intention alone is insufficient for an enforceable agreement to exist. The essential terms of the agreement must be sufficiently certain: UBS Securities Canada, Inc. v. Sands Brothers Canada, Ltd., 2009 ONCA 328, 95 O.R. (3d) 93, at paras. 21 and 47.

[106] Even the plaintiffs’ Demand Letter does not mention the $100,000 investment nor seek disgorgement of any profits. The defendants contend that the first mention of the idea of an investment occurred in the statement of claim, which is supported by the record and the evidence.

[107] Although Mr. Guak advanced the money, according to his evidence, he did so based on conversations he had with his wife, not with either of Mr. or Mrs. Chang. His affidavit contains no details of the terms of the investment but merely generalization. He states: “[H]owever, among other things, the prospect of making huge profits in the future, the room and board costs of Yoojin as a benefit to us in the form of interest payment, and the comfort of a bigger space in which Yoojin would be staying persuaded to make the requested investment in the sum of $100,000 into the Cummer House.”

[108] As for Mr. Chang, he says he has no knowledge of the arrangements. As an art teacher, he provided private art lessons to Yoojin during her homestay.

[109] Mrs. Lee also had surprisingly few details about key aspects of the alleged investment, though she testified that she was the one that borrowed the money and “lent” the money, which was a lot for her at the time. She says that she paid interest of eight percent on the loan. She says she had borrowed the money to make the investment. She did not know when the Cummer House would be sold.

[110] The plaintiffs can point to no written document or any written agreement to support their position. In the result, the issue is one of credibility.

[111] The parties dispute what this money was for. Whether the funds were an advance or an investment, the details of any agreement between the parties are not clear. Mrs. Lee could point to not one note, email, text message or other communication to the defendants about the alleged investment. Beyond that, there are no written documents or any communications whatsoever between the parties to indicate that this was an investment.

[112] It is undisputed that the plaintiffs and the Changs had an agreement that Yoojin would live with the defendants as she studied in Canada. Mrs. Lee does not dispute that the parties agreed that the plaintiffs would pay for their daughter’s room and board and other expenses, though there is some dispute as to the amount charged for room and board. The evidence by Mrs. Lee as to how her daughter’s room and board was being paid for is not credible. On her evidence, it was paid for by the plaintiffs paying interest payments on loans they had taken out, and the interest payments, unspecified, would be in lieu of actual payments to the defendants.

[113] On cross-examination, the defendants acknowledged receiving the $100,000 from the plaintiffs. Mrs. Chang acknowledged that the money helped a little bit with the purchase of the Cummer House but denied that it was an investment in it.

[114] The plaintiffs have also given contradictory evidence as to whether the $100,000 was an investment or a loan. The statement of claim refers to a loan. The plaintiffs have identified the amount as a loan both in their pleadings and in the Demand Letter. At paragraph 13 of their statement of claim, the plaintiffs in fact plead that the Changs asked for a loan to purchase the Cummer House. The plaintiffs plead that the Changs “suggested” certain conditions as set out paragraph 13 of the statement of claim, and that they “accepted this offer stated at paragraph 13 supra and wire transferred $100,000 to Myoungja and Kwangeui”.

[115] The plaintiffs’ Demand Letter also categorized the 2001 payment as a loan. The letter reads:

You have borrowed a total of KRW 200 million Won plus interest (still continuing to be paid) from us, including KRW 15 million Won in 2001, CAD $100,000 in 2001, KRW 25 million Won in 2004, CAD $20,000 in 2007, CAD $10,000 in 2008 and KRW 25 million Won regarding Capital in 2010. [Emphasis added.]

[116] The Demand Letter does not refer to any “investment.” Mrs. Lee has now resiled from most of the items in the Demand Letter and made a number of corrections as follows:

i. The $10,000 loan made in April 1999 is not mentioned.

ii. The reference to a $15,000 loan is in error; no such loan was made.

iii. The reference to a “$100,000 loan” should be “an investment”; this also attracted monthly interest fixed in the amount of $500, which would replace the room and board of Yoojin at the defendants’ house, until the full return of the investment and full payment of return on the investment.

iv. The letter does not mention the $18,000 loan made in May 2002.

v. The reference to a loan of $25,000 in 2004 was an investment.

[117] Mrs. Lee says Yoojin drafted the Demand Letter. She admitted on cross-examination that she told her daughter that she had some loans that she had to get back and she conceded that she reviewed the letter. Mr. Guak also admitted that he too reviewed the letter. In cross-examination, both plaintiffs admitted to reviewing this letter, however, there is no mention of an investment, or any demand for profits from the Cummer House. In fact, the first mention of the idea of an investment occurred in the statement of claim.

[118] The defendants say the claim is fabricated and first raised in the statement of claim. There is some basis for that argument. As noted, the plaintiffs can point to no documents before the statement of claim indicating that this amount was an investment, nor requesting the return of their $100,000 investment and alleged profit. On the other hand, there were numerous communications in writing related to the Hyundai Capital Loan.

[119] There is one final reason to accept the defendants’ position as being more plausible of the two. Aside from the $6,000 and $7,000 for her daughter’s room and board and tuition sent to the defendants in 2000, Mrs. Lee does not point to any other actual funds advanced to the defendants for her daughter’s homestay, art lessons, tuition, expenses, among other things. Instead, she argues that the interest payment on the $10,000 loan made in 1999 was to pay for her daughter’s art lessons (and her own); in her affidavit, she added a new term to the conditions for the purported $100,000 investment, which is contrary to her own pleading. It says that the $100,000 “attracted monthly interest fixed in the amount of $500, which would replace the room and board of Yoojin at the defendants’ house, until the full return of the investment and full payment of return on the investment”.

[120] Mr. Guak says in his affidavit that he and his wife transferred $378,037.38 to the defendants, of which $183,000 was for loans and investments and the balance was for his daughter’s tuition, allowances, and other living expenses. I note that neither of the plaintiffs set out in detail in their affidavits the amounts transferred to the defendants for these expenses. Mr. Guak’s affidavit merely annexes a chart based on bank statements which were exhibits to his wife’s affidavit.

[121] The defendants submit that the plaintiffs’ expenses for their daughter’s homestay was approximately $428,000, broken down as follows:

a. Payment for international students in junior high and high school in the amount of $63,000.

b. University tuition at OCAD in the amount of $56,000.

c. Guardian fee paid to Mr. Yim in the amount of $30,000.

d. Homestay fee in the amount of $158,400.

e. Miscellaneous items such as allowance and personal goods, art lesson fees, private tutoring, and flights to and from Korea in the amount of $120,000.

[122] On the evidence, the plaintiffs have failed to establish, on a balance of probabilities, that the $100,000 advanced to the defendants was for the purposes of an investment.

The 2002 payment

[123] Mrs. Lee says that she lent Mrs. Chang $18,000 in May 2002 as she was having financial problems. She says Mrs. Chang told her that the defendants would soon be able to pay back the debt from 1999 and this new loan as soon as they overcome their financial difficulty. On cross-examination, Mrs. Lee indicated the $18,000 was to be repaid in three weeks’ time. She has nothing in writing to confirm what the agreement was between the parties.

[124] The defendants say this money was to pay for Yoojin’s personal expenses which went beyond room and board, such as school fees, guardian fees and expenses associated with additional items that Yoojin needed, such as bicycles and roller skates. On cross-examination, when asked if her daughter complained about her living situation in 2002, Mrs. Lee noted that she did not complain, but she was in her teens, and it was a little difficult. The plaintiffs in their own statement of claim plead that they allegedly demanded repayment of this "loan" six months after it was advanced, but the defendants made no payments to the plaintiffs and the plaintiffs took no enforcement action until this action, in 2018, almost 16 years later.

[125] In addition to the two funds advanced, said to be loans, Mrs. Lee testified on cross-examination that in 2002 she was also advancing funds to the defendants for tuition, guardianship fees, “etc.” Her explanation as to why she would advance the funds in the face of what she said were two outstanding loans at that point, was not responsive to the question. She claimed Mrs. Chang was requesting it because she was in a difficult situation.

The 2004 venture

[126] There is no dispute that the plaintiffs advanced $25,000 to Mrs. Chang to invest in Mr. Yim’s townhouse venture, the Mountjoy House.

[127] The defendants say that they communicated the outcome to the plaintiffs and were advised to keep the funds and apply it towards any future expenses of Yoojin.

[128] The defendants agree the 2004 payment was originally intended to be invested in the venture. The investment venture was originally pitched by Mr. Yim. On cross-examination, Mrs. Chang admitted to receiving funds in 2004 from Mrs. Lee to invest in Mr. Yim’s project, though she could not recall the exact amount. She agreed that Mr. Yim returned the money to her after deducting the loss but could not recall the exact amount. She stated she told Mrs. Lee that she received the money back. Mr. Yim deposed that he returned the funds at the request of Mrs. Chang. He says that Mrs. Chang told him she lied to Mrs. Lee about having received the return of the funds. She denied this on cross-examination.

[129] At all material times, Mrs. Lee and Mr. Yim were friends who knew each other for more than 17 years. They routinely communicated with each other directly. Mrs. Lee admitted in cross-examinations to knowing that Mr. Yim was the facilitator of the investments and to having Mr. Yim’s contact information. If Mrs. Lee was truly concerned about the funds, she would have been able to discover the sale of the Mountjoy House on her own and there would likely have been written communications and demands.

[130] I do not find it reasonable that Mrs. Lee would wait 13 or 14 years to speak to Mr. Yim about the investment. Again, I find it striking that Mrs. Lee has a paper trail for the Hyundai Capital Loan and credit cards but not the investment. I find Mrs. Chang’s version of events more credible. In the result, the plaintiffs have not satisfied the court, on a balance of probabilities, that the amount is still outstanding.

The 2007 payment

[131] The plaintiffs assert that on September 27, 2007, they loaned the defendants $20,000 to make repairs to the Cummer House. The 2007 payment was supposed to have been paid back within three weeks.

[132] The defendants assert that the funds were payments towards Yoojin’s expenses.

[133] On cross-examination, Mrs. Lee conceded that the defendants had not repaid any of the other debts at this point in time. She testified that she asked for the money to be repaid before advancing this money in 2007. She testified that the defendants told her when the Cummer House was sold or the townhouses were developed, all would be repaid. She conceded that in 2007, she did not know when the Mountjoy House or the Cummer House would be sold. She had borrowed the $20,000, which she indicated was a lot of money for her. She testified that the money was to carry out repairs at the Cummer House and Mrs. Chang was to pay it back in three weeks. On re-examination, she says Mrs. Chang had not paid back the money in March 2008, and when she asked her about it, Mrs. Chang advised her the Cummer House would be sold soon, and the $10,000 and $20,000 would be paid back. Mrs. Chang did not pay back the money in three weeks. On re-examination, Mrs. Lee was asked when Mrs. Chang promised to repay her upon sale of the Cummer House, and she noted that this occurred in 2008.

The 2008 payment

[134] Mrs. Lee says she wired the defendants $10,000 on March 11, 2008, to address blocked toilets. She says she also borrowed this money. She testified that this money was also to be repaid in three weeks. She indicated she was angry and disappointed when it was not repaid but said Mrs. Chang told her the Cummer House would be sold in a short time. She claimed that each and every time, her husband would make a note to indicate what the money was for. For the $20,000 remittance form, she confirmed the Korean version, under the heading “Purpose” –“Foreign Student Transfer”.

[135] Mr. Guak testified on cross-examination that nothing has been sent or written to the defendants about the debts.

[136] The defendants state again that the 2008 payment was paid in support of Yoojin and her expenses.

[137] The plaintiffs have not established, on a balance of probabilities, that they advanced the $20,000 and $10,000 in 2007 and 2008, respectively, to the defendants as loans. I note that the plaintiffs have numerous emails to Mrs. Chang following up with her on the Hyundai Capital Loan from 2010 to 2013. On cross-examination, Mrs. Lee was unable to explain why this debt is treated differently than any of the other alleged debts, and why the defendants would take steps to repay this debt specifically, and not any of the other long-outstanding debts as alleged.

The 2010 Hyundai Capital Loan

[138] The parties agree that Mrs. Lee advanced $30,000 to Mrs. Chang in 2010. On the evidence, this payment was made voluntarily; there is no fraud as suggested by the plaintiffs. Mrs. Lee says that in 2010, she allowed Mrs. Chang to use her credit cards in South Korea by using a USB key. Although she claimed that she discovered that Mrs. Chang had obtained a loan without her consent, she admitted that when the defendants borrowed the money, Hyundai Capital transferred the money to her bank, and she then transferred the money to the defendants’ bank account.

[139] On October 14, 2010, Mrs. Lee transferred the $30,000 to Mrs. Chang’s bank account. On October 16, 2010, Mrs. Lee forwarded another $2,000 to Mrs. Chang’s account. Mr. Guak testified that he found out about this loan in preparing for the lawsuit.

[140] From October 2010 to November 2012, Mrs. Lee would calculate how much was owed, send the information to Mrs. Chang, who would then deposit the amount into her account. Mrs. Chang made periodic payments to Mrs. Lee towards paying the Hyundai Capital Loan as well as any outstanding balance from the three credit cards. Mrs. Chang periodically made payments to Mrs. Lee in relation to the Hyundai Capital Loan as well as any outstanding balance from the three credit cards. The credit card loans were substantially paid off. Mrs. Lee’s testimony in cross-examination corroborates the fact that payments were made towards this debt. Mrs. Lee was unable to explain why this debt is treated differently than any of the other alleged debts, and why the defendants would take steps to repay this debt specifically, and not any of the other long-outstanding debts as alleged.

[141] Between October 25, 2010, and December 26, 2012, Mrs. Chang contends that she repaid approximately $23,259 of the Hyundai Capital Loan. The plaintiffs say that approximately $25,000 remains.

[142] Mrs. Lee admitted that she was paying interest on the other loans; her explanation as to why the credit card debts were treated differently did not make sense. On cross-examination, she testified that when Mrs. Chang did not send her payment for the Hyundai Capital Loan, she sent her mail, texted her, and called her. She stated: “However, since then up to 2014, I couldn’t get in touch with her. So, when my first grandson was born July 14, I sent a …. then I called and I said the loan is exceeding $200,000 and then I asked her when will I be able to get paid back. And, then at that time she said everything will be resolved when the house is sold.” Mrs. Lee later volunteered during her cross-examination that she asked for repayment on July 14, 2014. She agreed that the credit card debt was partially repaid.

[143] There are e-mail exchanges between Mrs. Chang and Mrs. Lee between October 26, 2010, and September 20, 2013 about these credit cards debts and repayment. Mrs. Lee herself conceded that there was a significant amount of documents evidencing the credit card debt. She agreed on cross-examination that there were no written documents evidencing any of the alleged debts between 2001 to 2009. Between 2010 to 2012, Mrs. Lee sent 17 emails relating to the credit card debt; there is no reference in any of the emails to debts between 2001 to 2009.

[144] Text messages have also been tendered between Mrs. Lee and Mr. Chang, and again, no reference is made to any investments in those communications. In fact the only debt mentioned in the text messages, and that was back in 2011, was for the Hyundai Capital Loan. The text messages are at times ambiguous, referring to “loan” singular and at times “loans.” There is nothing inconsistent in the text message or even the surreptitiously recorded call in 2017. Mrs. Chang admits that she used the credit cards and had these outstanding debts, which were to be paid back once she returned to Canada.

IX. Analysis

A. Limitation Period – Do the defendants have a valid limitation defence?

The purpose of limitation periods

[145] In this case, the statement of claim was issued in January 2018. Some of the payments alleged to be debts occurred over 19 years before the action was commenced.

[146] Limitation statutes have been described as “statutes of repose” or “statutes of peace”: M. (.K) v. M. (H.), 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, at p. 29, citing Doe on the demise of Count Duroure v. Jones (1791), 100 E.R. 1031 (K.B.), and A’Court v. Cross (1825), 130 E.R. 540 (Ct. Comm. Pl.); Deaville v. Boegeman (1984), 1984 CanLII 1925 (ON CA), 48 O.R. (2d) 725 (C.A.), citing Tolson v. Kaye (1822), 129 E.R. 1267 (Ct. Com. Pl.); Hunter v. Gibbons (1856), 26 L.J. Ex. 1, at p. 5; and Scales v. Jacob (1826), 3 Bing. 638 (Ct. Comm. Pl.), at p. 645. This is based on the principle that there comes a time when a proposed defendant may reasonably expect that they will not be held to account for old obligations.

[147] The principle recognizes that a proposed defendant need not be concerned about the preservation of evidence once the limitation period has expired: M. (K.); Deaville.

[148] Plaintiffs are expected to act diligently and not to “sleep on their rights” by commencing timely suits: M. (K.), at p. 30. A plaintiff who seeks to rely on the discoverability rule bears the burden of demonstrating that the cause of action was not otherwise discoverable before the statutory period expired: M. (K.), at pp. 84-85.

[149] At common law, a cause of action arises for the purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence: Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 147, at para. 77, citing Nielsen v. Kamloops (City), 1984 CanLII 21 (SCC), [1984] 2 S.C.R. 2.

Does discoverability apply?

[150] Although the plaintiffs have pleaded facts which suggest that they are relying on the discoverability principle, they have not delivered a reply to the defence raised by the defendants that the claims are barred by statute. The plaintiffs have not raised discoverability in their closing submissions nor seek leave for late delivery of a reply to plead discoverability. A plaintiff has no obligation to plead matters relating to discoverability until a statement of defense pleading a limitation period is delivered: Collins v. Cortez, 2014 ONCA 685, 39 C.C.L.I. (5th) 1; Canadian Real Estate Association v. American Home Assurance Company, 2015 ONCA 389, at para. 1.

[151] At common law, discoverability is said to be “a general rule applied to avoid the injustice of precluding an action before the person is able to raise it”: Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, at para. 36; Grant Thornton LLP v. New Brunswick, 2021 SCC 31, at para. 29; and Sparham-Souter v. Town & Country Developments (Essex) Ltd., [1976] Q.B. 858 (C.A.), at p. 868, per Lord Denning, M.R., citing Cartledge v. E. Jopling & Sons Ltd., [1963] A.C. 758: “It appears to me to be unreasonable and unjustifiable in principle that a cause of action should be held to accrue before it is possible to discover any injury and, therefore, before it is possible to raise any action” (emphasis added).

[152] A plaintiff who seeks to rely on the discoverability rule bears the burden of demonstrating that the cause of action was not otherwise discoverable before the statutory period expired: M. (K.) v M. (H.), at para. 114. The common law rule of discoverability has been codified in s. 5(2) of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. It is well established that “some damage” is sufficient for the cause of action to accrue and to start the limitation period: Peixeiro, at para. 18; Hamilton (City) v. Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156, 347 D.L.R. (4th) 657, at para. 61. Various appellate courts have endorsed the notion that the term “damages” ought to connote the sum of money payable by way of compensation while “damage” should be confined to instances where it refers to the injury inflicted by the tort or breach of contract: see Dass v. Kay, 2021 ONCA 565, at para. 45; Brozmanova v. Tarshis, 2018 ONCA 523, 81 C.C.L.I. (5th) 1, at para. 35; Smith v. Union of Icelandic Fish Producers Ltd., 2005 NSCA 145, 757 A.P.R. 145, at para. 119; Metcalfe, at para. 55. As noted by Laforme J.A. in Metcalfe, at para. 54:

Damage is the loss needed to make out the cause of action. Insofar as it relates to a transaction induced by wrongful conduct, as I have explained, damage is the condition of being worse off than before entering into the transaction. Damages, on the other hand, is the monetary measure of the extent of that loss. All that the City had to discover to start the limitation period was damage. [Emphasis added.]

[153] The exact extent of the loss of the plaintiff need not be known for the cause of action to accrue: Cartledge, at p. 772, per Lord Reid, and July v. Neal (1986), 1986 CanLII 149 (ON CA), 57 O.R. (2d) 129 (C.A.).

[154] In Vu v. Canada (Attorney General), 2021 ONCA 574, 495 C.R.R. (2d) 1, at para. 47, the Court of Appeal noted:

Limitation periods are driven by when the “material facts on which [a cause of action] is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence”: Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 147, at p. 224; see also Grant Thornton LLP v. New Brunswick, 2021 SCC 31, at paras. 29, 42. As noted by this court in Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., 2019 ONCA 47, 144 O.R. (3d) 385, at para. 41, leave to appeal refused, [2019] S.C.C.A. No. 91: “discoverability means knowledge of the facts that may give rise to the claim. The knowledge required to start the limitation running is more than suspicion and less than perfect knowledge.”

Was there an acknowledgement of the debt extending the limitation period?

[155] Mrs. Lee says that after the plaintiffs sent the Demand Letter to the defendants, Mrs. Chang sent an e-mail reply to her on August 27, 2017, and said many things including, but not limited to, that she always intended to repay the loan. Mr. Chang sent a text message to say that he would make full repayment of the debt no matter how long it would take.

[156] At common law and under s. 13 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B (the “Limitations Act, 2002”), partial payment or acknowledgement of a liquidated debt starts the limitation period to run anew.

[157] Under s. 13(10) of the Limitations Act, 2002, the acknowledgement must be in writing and signed by the person or their agent. The relevant sections of s. 13 state, in part:

Acknowledgements

13 (1) If a person acknowledges liability in respect of a claim for payment of a liquidated sum, the recovery of personal property, the enforcement of a charge on personal property or relief from enforcement of a charge on personal property, the act or omission on which the claim is based shall be deemed to have taken place on the day on which the acknowledgment was made. 2002, c. 24, Sched. B, s. 13(1)

Liquidated sum

(8) Subject to subsections (9) and (10), this section applies to an acknowledgment of liability in respect of a claim for payment of a liquidated sum even though the person making the acknowledgment refuses or does not promise to pay the sum or the balance of the sum still owing. 2002, c. 24, Sched. B, s. 13 (8).

Restricted application

(9) This section does not apply unless the acknowledgment is made to the person with the claim, the person’s agent or an official receiver or trustee acting under the Bankruptcy and Insolvency Act (Canada) before the expiry of the limitation period applicable to the claim. 2002, c. 24, Sched. B, s. 13 (9).

Same

(10) Subsections (1), (2), (3), (6) and (7) do not apply unless the acknowledgment is in writing and signed by the person making it or the person’s agent. 2002, c. 24, Sched. B, s. 13(10).

Same

(11) In the case of a claim for payment of a liquidated sum, part payment of the sum by the person against whom the claim is made or by the person’s agent has the same effect as the acknowledgement referred to in subsection (10). 2002, c. 24, Sched. B, s. 13 (11).

[158] Section 13(1) requires a “clear and unequivocal acknowledgement of the debt claimed”: Middleton v. Aboutown Enterprises Inc., 2009 ONCA 466, at para. 1; 1702108 Ontario Inc. v. 3283313 Canada Inc., 2016 ONCA 420, 132 O.R. (3d) 237, at para. 5. Section 13(1) is engaged when a person acknowledges liability in respect of a claim for payment of a liquidated amount: Middleton, at para. 1; 1702108 Ontario Inc., at para. 5.

[159] The debtor does not have to demonstrate and confirm the amount of the debt that remains owing for the acknowledgment to be effective: Middleton, at para. 1.

[160] An acknowledgement by email or a text message that is clear and unequivocal may meet the requirement under the Limitations Act, 2002: see, for example, Kirloskar Technologies (P) Ltd. v. Best Theratronics Ltd., 2021 ONSC 429, 18 B.L.R. (6th) 103, aff’d 2022 ONCA 331; Lev v. Serebrennikov, 2016 ONSC 2093 (Div. Ct.), at para. 25; Re Temple, 2012 ONSC 376, 109 O.R. (3d) 374; Environmental Building Solutions v. 2420124 Ontario Limited, 2018 ONSC 3112, 92 C.L.R. (4th) 153, at para. 77; The Maher Organization Ltd. v. HCI Mercantile Inc., 2022 ONSC 3585, at paras. 23-28; 1475182 Ontario Inc. o/a Edges Contracting v. Ghotbi, 2021 ONSC 3477, 155 O.R. (3d) 272, at paras. 34-36.

[161] In Kirloskar, an email from the defendant’s employee, with an attached statement of account, with “OK” noted next to certain amounts, constituted an acknowledgment of liability. In Ghotbi, at paras. 43-50, there was no dispute that the defendant was the author of the texts that were in question. He used his cellular telephone to send and receive texts with the plaintiff’s principal. The defendant’s cellular telephone had a unique phone number linked to his phone and other unique identifiers associated with it, including an International Mobile Equipment Identifier (“IMEI”) number, which the court found provided, in effect, a digital signature with every message sent such that the requirements of s. 13(10) were met.

[162] An acknowledgement made after expiration of a limitation period does not refresh the limitation period.

[163] That being said, the purported acknowledgement in this case was sent after the expiry of the limitation period for the alleged debts, and, in the result, would not have refreshed the limitation period. I do not find that any of the text messages are a clear and unambiguous acknowledgement by Mrs. Chang, or the Changs, of the debts. She could have been referring to the Hyundai Capital Loan, which she has acknowledged. I am also concerned about the reliability of the translation of the texts.

What is the applicable limitation period regarding the alleged 1999 loan?

[164] Since the statement of claim was issued after January 1, 2004, and the acts or omissions on which the claim is based occurred before January 1, 2004, the transition provisions contained in s. 24 of the Limitations Act, 2002 governs the applicable limitation period.

[165] Section 24(5) of the Limitations Act, 2002 provides as follows:

(5) If the former limitation period did not expire before January 1, 2004 and if a limitation period under this Act would apply were the claim based on an act or omission that took place on or after that date, the following rules apply:

1. If the claim was not discovered before January 1, 2004, this Act applies as if the act or omission had taken place on that date.

2. If the claim was discovered before January 1, 2004, the former limitation period applies. [Emphasis added.]

[166] The “former limitation period” is defined in s. 24(1) as the limitation period that applied in respect of the claim before the new Act (the Limitations Act, 2002) came into force on January 1, 2004.

[167] Pursuant to s. 24(5) of the Limitations Act, 2002, the plaintiffs’ claim for negligent misrepresentation with respect to an act or omission that took place before January 1, 2004, which was discovered before January 1, 2004, but for which no action had been commenced by January 1, 2004, is governed by the former limitation period.

[168] Section 45(1)(g) of the former Limitations Act, R.S.O. 1990, c. L.15 provides the following:

(1) The following actions shall be commenced within and not after the times respectively hereinafter mentioned,

(g) an action for trespass to goods or land, simple contract or debt grounded upon any lending or contract without specialty, debt for arrears of rent, detinue, replevin or upon the case other than for slander,

within six years after the cause of action arose.

[169] Mrs. Lee admitted on cross-examination that she stopped taking art lessons from Mr. Chang in 2000 and the 1999 loan was to be repaid in three weeks; however, she took no actions to enforce the loan for over 20 years.

[170] Although Mrs. Lee testified that Mrs. Chang asked for an extension to repay this loan in 2002, if a debt existed, the limitation period would have been triggered upon nonpayment of the loan the month after it became due. At the latest, on Mrs. Lee’s own evidence, when she stopped taking art lessons in 2000, and the interest payments, which were part of the agreement according to her, fell due, the limitation period would start to run when there was non-payment of the interest in July 2000.

[171] The plaintiffs’ position is that interest on the debt was part of the agreement. At paragraph 9 of the statement of claim, the plaintiffs pled: “Kyonghwa lent money to Myoungja and Myoungja and Kyounghwa agreed that there would be no interest accrued but Yoojin and Kyounghwa could take painting lesson from Kwangeui as an interest payment.”

[172] At the very latest, the limitation period was tolled in 2002 when the principal and interest on the loan remained unpaid. The clock does not stop once it starts to run. The former limitation period would therefore apply, and the claim would have been statute barred in 2008.

[173] In this case, the plaintiffs knew or ought to have known that they had a potential claim for breach of the agreement with respect to the purported 1999 loan as early as July 2002 when the interest payment was outstanding, as Mrs. Lee was no longer taking art lessons, or no later than May 2012, regarding the alleged outstanding debts, based on Mrs. Lee’s admission in her affidavit that after she made the purported $18,000 loan, since then she has been asking the defendants for repayment of the 1999 loan “at intervals between six months to a year”. Mrs. Lee was aware that Mrs. Chang was not paying the loan or the interest payments attributable to her lessons. I infer from her evidence that interest was accruing on the loan which she herself borrowed to turn around and lend to Mrs. Chang.

[174] For the sake of completeness, while I make no determination as the issue was not addressed by either party, given the plaintiffs’ statement of claim relates to debts that are almost two decades old, there is a question as to whether 15-year ultimate limitation period under s. 15(4)(b) of the Limitations Act, 2002 is applicable.

B. Applicable Limitation Act re: post-2001 alleged debts/investments

[175] Under s. 4 of the Limitations Act, 2002, a proceeding may not be commenced more than two years after the claim is discovered. A claim is defined in s. 1 as: “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission.”

[176] Pursuant to s. 5(1)(a) of the Limitations Act, 2002, a claim is discovered when the person first knew (or reasonably ought to have known) the following four elements: (i) the occurrence of the injury, loss or damage, (ii) that it was caused by or contributed to by an act or omission, (iii) that the act or omission was the defendant’s, and (iv) based on the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek a remedy. Under s. 2(1), the Limitations Act, 2002 applies to “claims pursued in court proceedings”.

[177] In assessing the plaintiff’s state of knowledge, the court may rely on both direct and circumstantial evidence: Grant Thornton, at para. 44. The level of actual or constructive knowledge needed is more than mere suspicion or speculation, but less than perfect knowledge of liability. The level of knowledge is reached when they have knowledge, either actual or constructive, of the material facts upon which the plaintiff can draw a plausible inference of the defendant’s liability: Grant Thornton, at para. 46; Zeppa v. Woodbridge Heating & Air-Conditioning Ltd., 2019 ONCA 47, 144 O.R. (3d) 385, at para. 41, leave to appeal refused, [2019] S.C.C.A. No. 91. The plaintiff does not have to be certain that the known facts will give rise to legal liabilitybut the plaintiff must have knowledge of the material facts that form the basis for the plausible inference of the defendant’s legal liability: Di Filippo v. Bank of Nova Scotia, 2024 ONCA 33, at para. 38.

[178] Pursuant to s. 5(2) of the Limitations Act, 2002, the plaintiffs must rebut the statutory presumption that that the claim was discovered on the date that the act or omission on which the claim is based took place. To rebut the presumption, a plaintiff must establish that its claim was not discovered until some other date, employing the four cumulative criteria listed in s. 5(1)(a).

[179] The discoverability analysis required by s. 5(1) and (2) of the Limitations Act, 2002 contains cumulative and comparative elements: Clarke v. Sun Life Assurance Company of Canada, 2020 ONCA 11, 149 O.R. (3d) 433, at para. 19.

[180] Section 5(1)(a) identifies the four elements a court must examine cumulatively to determine when a claim was "discovered": Clarke, at para. 20; Rooplal v. Fodor, 2021 ONCA 357, 156 O.R. (3d) 721, at paras. 72-73; Grant Thornton, at paras. 42-43.

[181] When considering the four elements, a court must make two findings of fact:

i. The court must determine the "day on which the person with the claim first knew" all four of the elements. In making this first finding of fact, the court must have regard to the presumed date of knowledge established by s. 5(2): "A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved"; and

ii. The court must also determine "the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known" of the four elements identified in s. 5(1)(a).

The 2001 investment of $100,000

[182] I have concluded above that the $100,000 was not an investment into the Cummer House.

The 2002 payment

[183] This loan was purportedly made on May 21, 2002. Mrs. Lee’s evidence is contradictory as to whether the purported loans were demand loans or termed loans. On cross-examination, she testified that the loans should have been repaid within two to three weeks. However, the plaintiffs’ own pleadings, and Mrs. Lee’s own evidence, shows that she made demands for their repayment every six months. At the same time, the plaintiffs also indicate that they agreed to forbear enforcement of the loans until the Cummer House was sold.

[184] At paragraph 17 of the statement of claim, the plaintiffs plead:

Since then, once every six months to a year, the plaintiffs requested Myoungja and Kwangeui for repayment of $18,000 and other outstanding loans, but Myoungja and Kwangeui eventually requested the plaintiffs that they be allowed to pay the money back when Cummer House is sold. The plaintiffs accepted the request of Myoungja and Kwangeui. The plaintiffs could not insist more as their daughter Yoojin was living with Kwangeui and Myyoungja.

[185] The plaintiffs submit that Mrs. Chang “requested a forbearance of repayment, so that the defendant may repay the debt when the Cummer House is sold,” which offer was accepted by the plaintiffs, and therefore the limitation period does not start to run until October 20, 2016 at the earliest. This is applicable to the 1999 purported loan as well.

[186] A creditor and debtor can agree to forbear enforcement of a debt, and such an agreement would suspend the running of the limitation period for the period of forbearance: Shook v. Munro et al., 1948 CanLII 8 (SCC), [1948] S.C.R. 539; Metcalfe, at para. 73. A creditor’s promise to forbear will not suspend the limitation period unless the debtor provides consideration for that promise. There is no evidence of a forbearance agreement between the parties. In fact, the defendants dispute that the 1999 payment and the 2002 payments were loans. I cannot find, on the evidence, that the parties entered into a forbearance agreement with respect to these payments. Fresh consideration is required for a forbearance agreement. The plaintiffs have not presented any evidence to the court of any consideration given by the defendants in exchange for a promise by the plaintiffs not to enforce the loans. I do not find on the evidence before me that there was any forbearance agreement between the parties that would suspend the running of the limitation period. I note that the plaintiffs advance the same argument for the 2007 and 2008 payments, discussed below, and the same reasoning applies.

[187] If I am wrong, the plaintiffs’ demand for repayment of the alleged loans, every six months to a year, would have triggered the running of the limitation period. Given the admission in the statement of claim, the plaintiffs would have demanded repayment of the $18,000 by the end of 2002, as the loan was made in May and was to be repaid within a few weeks. The defendants’ failure to pay would have triggered the running of the limitation period. The plaintiffs would have known by December 2002 that the defendants were not going to repay this loan.

[188] Mrs. Lee agreed in cross-examination that the defendants made payments towards the Hyundai Capital Loans. When asked why the defendants would treat this loan differently than the others, Mrs. Lee testified: “Those other loans, I numerously requested but she was saying the house would be sold shortly. So, she said offer was made but it was cancelled three times for the sale of the house. So, she said she will pay back large loan when the house is sold, but loan with a card, the bill is coming up every month. That’s why she decides to pay me every month because of the card.”

[189] Having said that, a reasonable person with the abilities and in the circumstances of the plaintiffs should know or should have known that the defendants would not repay the loans and that a proceeding would be an “appropriate” means to seek a remedy in accordance with s. 5(1)(a)(iv) of the Limitations Act, 2002. By this time, from the plaintiffs’ own evidence, the defendants had two outstanding loans and had implored them to “invest” in their residential property because they could not afford to buy the property on their own. A plaintiff is required to exercise due diligence in discovering any potential claim. Waiting 16 years to commence a claim on a debt is the antithesis of exercising due diligence.

The 2007 and 2008 payments

[190] As for the 2007 and 2008 payments, I make the same observations. The plaintiffs contend that the $20,000 payment to the defendants in September 2007 was to be paid back within three weeks. On the plaintiffs’ own evidence, the defendants were to repay this amount by October 2007. Accepting the plaintiffs’ position, the plaintiffs knew that that the purported loan would not be repaid by at least November 2007. The two-year limitation period would have expired in November 2009.

[191] With respect to the 2008 payment of $10,000, which the plaintiffs say was advanced to the defendants in March 2008, again, on cross-examination, Mrs. Lee says this was to have been repaid within three weeks. On the plaintiffs’ own evidence, they would have had the requisite knowledge by at least May 2008 that the defendants had no intention of repaying this purported loan. On Mrs. Lee’s own evidence, the two-year limitation period would have expired in May 2010.

The 2004 venture

[192] There is no dispute that the plaintiffs advanced $25,000 to be invested into the venture organized by Mr. Yim. Mr. Yim says that Mrs. Chang invested $20,000 into the Mountjoy House venture. He testified that there was a net loss to each partner of approximately $5,000 and he returned approximately $15,000 to each investor. The venture folded quickly after it started in 2005. Mrs. Lee says that “[f]rom October 2004, and once every six months to a year thereafter”, she would ask about the investment. She claimed Mrs. Chang told her Mr. Yim refused to answer their questions and was ignoring them. She also made enquiries of Mr. Chang, who lived in Korea between 2011 and 2012, and claimed he told her that Mr. Yim was avoiding him and Mrs. Chang. Mrs. Lee says that she spoke to Mr. Yim in September 2017 and was advised at that time about what happened with the townhouse venture. The plaintiffs say that the defendants never disclosed the sale of the Mountjoy House to them.

[193] The defendants say that they advised the plaintiffs that the investment did not proceed as planned, and the plaintiffs instructed them to keep the remaining funds and apply it to Yoojin’s future expenses.

[194] There is some support for the defendant’s version of events. Again, there are email communications with respect to the Hyundai Capital Loan. The plaintiffs can point to no written communication to the defendants enquiring about this investment. This may also explain why they made no enquiries of Mr. Yim about the investment despite being aware, as they indicate in their pleading, that Mr. Yim, their daughter’s legal guardian was “also a partner in said investment venture and a leader of the venture business.” On cross-examination, Mrs. Lee agreed that she was aware that Mr. Yim was the “organizer” of the venture. She had his contact information. She knew him, had met him, and had dinner with him at the defendants’ house. She could have asked him a question about the investment; she did not.

[195] For his part, Mr. Yim says he had no knowledge that the plaintiffs had advanced the funds to Mrs. Chang until 2018, when Mrs. Chang told him that had been the case. He had known the plaintiffs for over twenty years. He testified that they only exchanged greetings and on cross-examination denied any discussions about the investments. On cross-examination, he admitted to having discussions with Mrs. Lee about her daughter. It is therefore plausible that the plaintiffs made no inquiry about the $25,000 investment because they had directed the defendants to apply it to their daughter’s future expenses.

[196] Regardless of the dispute about what was to become of the net proceeds of the venture investment, if the defendants did in fact advise the plaintiffs of the outcome of the townhouse venture, then the plaintiffs would have known that the venture collapsed sometime after September 2005. They have not discharged the onus of proving that some other date is applicable.

[197] A prospective plaintiff is required to exercise due diligence in the discovery of their claim. There is no evidence that Mrs. Lee or Mr. Guak did so. There are no written communications to the defendants about the venture investments. This, of course, contrasts with Mrs. Lee’s dealing with Mrs. Chang regarding the Hyundai Capital Loan.

[198] Mrs. Lee says she came to Canada one to two times a year to see her daughter. Based on her evidence, when her daughter was staying with the defendants, she was apprehensive that a refusal of a request for a loan or investment would negatively affect her daughter.

[199] However, Yoojin returned to the Republic of Korea on a permanent basis in July 2011, yet Mrs. Lee still did nothing, if her evidence is to be accepted, to press for information about this investment. There are no notes, text messages, emails or other written communications that the plaintiffs can point to. In fact, she did not ask Mr. Yim about the investment, though they spoke to each other about Yoojin, and she saw him on occasions. Given that relationship, it is not plausible that she would not have asked Mr. Yim about the investment, if it was still an issue, especially as the plaintiffs assert the defendants were advising them that Mr. Yim was refusing to answer their questions. From her evidence, she only spoke to him almost 13 years after the fact.

[200] Neither party have addressed whether the two-year or ten-year limitation period under the Real Property Limitations Act, R.S.O. 1990, c. L.15, should apply. Regardless, since the claim was issued in January 2018, both the two-year and the ten-year limitation period would have expired.

[201] In this case, I find that as the investment was made in 2004, the property sold in September 2005, and given Mrs. Lee’s admission that she had made inquiries since October 2004, the two-year limitation period would have expired in September 2007. The onus is on the plaintiff to rebut the presumption, which they have not. In any event, by 2011, Mrs. Lee knew or ought to have known material facts underlying a cause of action for breach of contract or unjust enrichment, as the case may be.

[202] Mrs. Lee herself says that by February 2011, she and her husband were determined not to extend any more loans to Mrs. Chang. Her affidavit chronicles numerous phone calls from Mrs. Chang, who called her pleading with her to loan her money. If she is to be believed, she was aware of Mrs. Chang’s “difficult” financial situation. It was not reasonable for her to rely on any assurances from the defendants.

The 2010 Hyundai Capital Loan

[203] The credit card loans occurred on October 25, 2010. Emails show that Mrs. Lee would request amounts owed with any offset for her daughter’s expenses. Mrs. Lee’s evidence is that Mrs. Chang and her two daughters stopped making the credit card payments in August 2012. Mrs. Chang then disappeared in early 2013 for a year and half. Mrs. Lee sent her texts and emails. She asked Mrs. Chang to continue paying the credit card loans after she stopped making payment. She claimed Mrs. Chang told her that her family had financial difficulties at that time and asked to wait a while. She tried to contact Mrs. Chang from early 2013 to June 2014, but Mrs. Chang never responded to her. She was ultimately able to demand repayment. In her affidavit, she deposes:

Subsequently, in July 2014, I had telephone conversation with Myoungja and demanded outstanding debts and also inquired about two investments Youngsea and I made into the defendants’ town house investment and the Cummer House investment. I told her that the principal amount transferred to her and her husband Kwangeui went over $200,000 and I was suffering the incurred debt. She told me that everything and more would be eventually paid back and returned with huge profits when they successfully sold the Cummer House. [Emphasis added.]

[204] On the evidence, Mrs. Chang stopped making payments in 2012. There are no partial payments beyond 2012. There is no acknowledgement during the period of time which the limitation period would have run, and that is between 2013 to 2015. Mrs. Lee knew or ought to have known by September 2012, and as late as 2013, that Mrs. Chang was not going to be honouring her obligations. It was not until July 2014 that she says she had a conversation with her, but there is no acknowledgement of the debt which satisfies the statutory requirement of s. 13 of the Limitations Act, 2002 to suspend the limitation period.

[205] In my view, the limitation period was triggered by September 2012, when Mrs. Chang did not meet her payment obligations. I find that the limitation period expired sometime in September 2014. Mrs. Lee was in possession of the underlying material facts referred to in s. 5(1)(a) and is presumed to have known of these material facts on the day the wrongful act took place unless the contrary is proved. She knew that Mrs. Chang had failed to pay the credit card loan. It was overdue. There is no evidence before the court to indicate that the limitation period was renewed by partial payment or an acknowledgment after September 2022. The plaintiffs have not discharged the onus of proving that the claim was discoverable on some other date. Moreover, given Mrs. Lee’s evidence that she followed up on the credit card loan and received no response from Mrs. Chang from 2013 to July 2014, and given her evidence that she and her husband refused to extend any further loans to Mrs. Chang, a reasonable person with the abilities and in the circumstances of Mrs. Lee ought to have known of the matters referred to in s. 5(1)(a).

[206] Mrs. Lee did not need to know that Mrs. Chang had declared bankruptcy before realizing that a proceeding would be an appropriate means to seek to remedy it, because, from her own admissions, Mrs. Chang repeatedly borrowed money over the years which she did not pay back. By this time, it had been two or three years since her daughter, Yoojin, left Canada permanently and was no longer living with the defendants.

[207] If I am wrong, Mrs. Chang made an assignment into bankruptcy in 2017. She listed the outstanding amount of the Hyundai Capital Loan as one of the debts. The plaintiffs’ claim with respect to this loan is therefore stayed pursuant to the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B.3 (the "BIA"). I reject the plaintiffs’ argument that the credit card debt and Hyundai Capital Loan arose out of fraud, embezzlement, misappropriation or defalcation, and would survive bankruptcy under s. 178(1)(d) of the BIA. Mrs. Lee admitted on cross-examination that she gave the information and USB key to Mrs. Chang to permit her to obtain the loan from her credit card. Although she claimed it was done without her consent, she admitted that the money was transferred to her account and further admitted that she then transferred the funds to Mrs. Chang’s account. It is also her evidence that she procured the three credit cards for them. There is no fraud on the evidence before me.

General conclusion re: limitation period

[208] The plaintiffs have not addressed the discoverability principle in their closing submissions. Based on the evidence relied upon, discoverability is central to the plaintiffs’ ability to maintain this action. I am satisfied that the plaintiffs have not rebutted the presumption that the claim was discovered on the day the act or omission on which the claim is based took place. Alternatively, on the record on the evidence before me, the plaintiffs have not acted with due diligence in the face of repeated nonpayment of the alleged loans going back to 1999.

[209] I note that the plaintiffs have not delivered a reply to plead discoverability. Based on the plaintiffs’ arguments, however, they are relying on the discoverability principle.

[210] The discoverability period begins when the plaintiff discovers or, through the exercise of reasonable diligence, ought to have discovered, the underlying material facts of the claim: Sun v. Cheng, 2024 ONCA 102, at para. 9. It is not clear to me that this is fatal.

[211] On a generous review of the evidence, I find that at the very latest, Mrs. Lee had knowledge of, or ought to have had knowledge of, the material facts underlying her claim for a breach of contract, with respect to the various purported loans, by February 2011 and as late as December 2015. By Mrs. Lee’s own evidence, Mrs. Chang continually requested loans, which she did not pay back. The 1999 loan had not been repaid. The 2002 loan had not been repaid. The 2007 loan had not been repaid. The 2008 loan had not been repaid. Mrs. Lee knew, or ought to have known, that Mrs. Chang would not pay back the purported loans because she says she pleaded with her in February 2011 to borrow more money and Mrs. Lee alleges that she and her husband refused this request. The plaintiffs also say the defendants reportedly gave excuses as to why the Cummer House was not being sold.

[212] According to Mrs. Lee’s evidence, Mrs. Chang refused to respond to her for a year and a half (in 2013 to 2014). She clearly resurfaced in 2014 but, if Mrs. Lee’s evidence is to be believed, she was still delinquent in paying the outstanding loans. The plaintiffs plead at paragraph 32 of their statement of claim that in July 2014, Mrs. Lee had a telephone call with Mrs. Chang and demanded payment of the outstanding debts and enquired about the two investments. The plaintiffs also plead, and it is also Mrs. Lee’s evidence, that when Mrs. Lee saw Mrs. Chang and her daughters in Seoul in December 2015, she was selling cosmetics. In her affidavit, Mrs. Lee says this was a pyramid scheme and noted: “Since she said she had difficult time, I bought the cosmetics that she sold.” This further shows that Mrs. Lee was aware of the Changs’ financial difficulties and knew or ought to have known that the alleged loans were not going to be repaid.

[213] Mrs. Lee says that in December 2015, she “demanded” the “outstanding loan” be paid and asked for an explanation about the townhouse venture and why the Cummer House had not been sold. Mrs. Lee demanded Mrs. Chang to pay at least $1,000/month to reduce the outstanding debt. Her own daughter, Yoojin, says that they were “desperate” to collect in 2015. She says, “In or about the end of 2015, she did tell me that she invested in the Cummer House for profit sharing, but it slipped out of my mind as we were desperate to collect the principal sum my parents handed over to the defendants. At that time, my family was in great distress and was looking to recover the principal amount lost.” This further demonstrates that Mrs. Lee knew or ought to have known that the defendants would not pay back the alleged loans. In my view, Mrs. Lee had constructive knowledge of the material facts upon which the plaintiffs could draw a plausible inference of the defendants’ liability.

C. Unjust enrichment

[214] To establish a claim for unjust enrichment, the plaintiffs must establish that the defendants have been enriched, the plaintiffs suffered a corresponding detriment, and there is no "juristic reason" for the enrichment: Pettkus v. Becker, 1980 CanLII 22 (SCC), [1980] 2 S.C.R. 834.

[215] Given my findings above, I would dismiss the claim for unjust enrichment. The plaintiffs have not established that the $100,000 was to be an investment in the Cummer House.

D. Fraudulent misrepresentation

[216] The plaintiffs claim that they discussed the $100,000 investment with the defendants, with Mrs. Lee becoming a conduit of her husband’s agreement regarding the $100,000 investment between the plaintiffs and defendants. Nowhere in his affidavit does Mr. Guak indicated that he had any discussions with the defendants. He says that his discussions were with his wife regarding the “investment opportunity.”

[217] The plaintiffs claim that the defendants made representations to them regarding profit sharing which resulted in the plaintiffs investing $100,000 into the defendants’ purchase of the Cummer House. The plaintiffs allege that the Changs had no intention of returning the investment to the plaintiffs from the beginning. The plaintiffs assert that after the defendants sold the Cummer House, Mrs. Chang lied to the plaintiffs and said that the Cummer House was never sold. Further, they both transferred the sale proceeds of the Cummer House to their daughters.

[218] As noted above, the plaintiffs have not established that the $100,000 was an investment. I do not find, on the evidence, that there was any false representation made by the defendants, or any of them, to the plaintiffs with respect to the $100,000. The plaintiffs have presented contradictory evidence, even going opposite to what is in their pleadings, that the defendants “requested the plaintiffs to lend them money in the sum of $100,000”. They state in their pleading that the defendants “suggested” a number of things, which are identified in paragraph 13 of the statement of claim. I am not satisfied that these were in fact representations made to them by the defendants to the plaintiffs, nor that these representations were false, that the defendants knew the statements were false, that the defendants made the representations with the intention that they would be acted upon by the plaintiffs, and that the plaintiffs relied upon the statements and suffered damages. Although the plaintiffs clearly indicate in their own pleadings that the defendants “suggested,” certain terms, they claim that they “accepted this offer” and wired the money to the defendants. On the totality of the evidence, and the plaintiffs own pleadings, I am not satisfied that there was any such offer.

[219] In fact, the alleged fraudulent misrepresentations relied upon by the plaintiffs are set out in paragraph 47 of the statement of claim and it is not clear when the statements were made or to whom, but what is apparent is that they were all made, except perhaps the alleged false representation about repaying the $100,000, after the alleged investments or loans.

X. Defendants’ Claim for Equitable and Legal Set-Off

[220] In Telford v. Holt, 1987 CanLII 18 (SCC), [1987] 2 S.C.R. 193, at para. 34, the Supreme Court of Canada articulated five principles of equitable set-off, as outlined in Coba Industries Ltd. v. Millie’s Holdings (Can.) Ltd. and Tsang (1985), 1985 CanLII 144 (BC CA), 65 B.C.L.R. 31 (C.A.), at p. 22, as follows:

1. The party relying on a set-off must show some equitable ground for being protected against his adversary’s demands: Rawson v. Samuel (1841), 41 E.R. 451 (Ch. Div.).

2. The equitable ground must go to the very root of the plaintiff’s claim before a set-off will be allowed: British Arzani (Felixstowe) Ltd. v. International Marine Management (U.K.) Ltd., [1980] Q.B. 137.

3. A cross-claim must be so clearly connected with the demand of the plaintiff that it would be manifestly unjust to allow the plaintiff to enforce payment without taking into consideration the cross-claim: Federal Commerce & Navigation Co. v. Molena Alpha Inc., [1978] Q.B. 927, reversed in part [1979] 1 All E.R. 307 (H.L.).

4. The plaintiff’s claim and the cross-claim need not arise out of the same contract: Bankes v. Jarvis, [1903] 1 K.B. 549 (Div. Ct.); British Anzani.

5. Unliquidated claims are on the same footing as liquidated claims: Newfoundland v. Newfoundland Railway, (1888) L.R. 13 App. Cas. 199 (P.C.).

[221] Given my findings above, the defendants will not be able to establish that they come within the first criteria. Accordingly, there is no basis to consider the relief sought by the defendants.

XI. Disposition

[222] In the result, for the reasons above, I make the following disposition:

i. The plaintiffs’ action in its entirety is dismissed:

a) The plaintiffs’ claims on the alleged debts stemming from funds transferred to the defendants, or any of them, in 1999, 2002, 2004 (the venture), 2007 and 2010 are barred by statute.

b) The plaintiffs’ action for breach of contract against all defendants is dismissed.

c) The plaintiffs’ action for fraudulent misrepresentation, deceit, unjust enrichment, money had and received, breach of fiduciary duty and fraudulent conveyance, as against all defendants, are dismissed.

d) The plaintiffs’ claim for an equitable tracing order of the sale proceeds of the property municipally known as 206 Cummer Avenue, is dismissed.

XII. Costs

[223] If the parties are not able to agree on costs, I will consider written submissions based on the following schedule:

i. the defendants shall deliver costs submissions, including a Bill of Costs, Costs Outline, and dockets (or computer-generated dockets) no later than 30 days of the date of these Reasons.

ii. The plaintiffs shall deliver their responding submissions and supporting materials within 30 days thereafter.

iii. Reply submissions, if necessary, on behalf of the defendants, shall be delivered no later than five days thereafter.

iv. The costs submissions, excluding the Costs Outline, Bill of Costs and any supporting case law, must be no longer than five pages, double spaced.

v. Any authority referred to may be hyperlinked to a free online source for decisions.

vi. The costs submissions should also be provided in Word format and emailed to Ms. Diamante. All submissions and supporting materials on costs must also be uploaded to Caselines to the Trial bundle.

A.P. Ramsay J.

Released: February 28, 2024

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

KYOUNG HWA LEE and YOUNG SEA GUAK

Plaintiffs

– and –

MYOUNG JA CHANG a.k.a. MYOUNGJA CHANG a.k.a. MYOUNG-JA CHANG a.k.a. MYOUNG JA YOON a.k.a. MYOUNGJA YOON a.k.a. MYOUNG-JA YOON and KWANG EUI CHANG a.k.a. KWANGEUI CHANG a.k.a. KWANG-EUI CHANG and JI YOUNG CHANG a.k.a. JENNY CHANG a.k.a. JENNY JI YOUNG CHANG a.k.a. JI-YOUNG CHANG and BO YOUNG CHANG a.k.a. BONNIE CHANG a.k.a. BONNIE BO YOUNG CHANG a.k.a. BO-YOUNG CHANG

Defendants

REASONS FOR JUDGMENT

Justice A.P. Ramsay

Released: February 28, 2024