Reasons for Decision

Court File No.: CV-22-00688874-0000
Date: 2025-02-14
Ontario Superior Court of Justice

Between:
Jaymat Limited, Plaintiff
– and –
Vivo Pizza Pasta Franchising Inc. and Pino Trichilo, Defendants

Appearances:
Kevin Sherkin and Mark De Sanctis, for the Plaintiff
Lucas Lung, for the Defendants

Heard: January 7, 2025
Released: February 14, 2025
Judge: C. Stevenson

Introduction

[1] This is a motion by the plaintiff Jaymat Limited ("Jaymat") for summary judgment in the amount of $2,135,000.00 plus interest. According to the amended factum, the claim is based on the defendants' failure to pay:

(a) $2,100,000.00, plus interest, due and payable under a promissory note dated October 22, 2021; and
(b) $35,000.00, plus interest, which the defendants admit is a separate debt and is due and payable.

[2] The individual defendant Joseph Trichilo, also known as Pino Trichilo ("Trichilo"), denies liability under the promissory note but admits that he personally owes $533,000.00 to the plaintiff. Trichilo admits that he borrowed $500,000.00 from Jaymat to purchase his Florida home and a separate $33,000.00. He says he will repay the $533,000.00 when Jaymat removes the lien it registered against the Florida home based on the events which are the subject of this claim.

[3] Both defendants say that the plaintiff's claim should be dismissed in all other respects.

[4] Trichilo agrees all aspects of his personal liability can be determined in this summary judgment motion.

[5] The parties agree that the name of the corporate defendant should be "Vivo Pizza Pasta Franchise Inc.”, rather than Vivo Pizza Pasta Franchising Inc., and I grant leave to amend the statement of claim accordingly.

[6] The amount claimed in the amended statement of claim is $2,319,661.31 or “another amount to be proven”. The notice of motion refers to the amount claimed in the statement of claim.

Background

[7] Between July 2018 and December 2019, Arthur Artuso ("Artuso"), through his company Jaymat, advanced a total of $1,567,000.00 in respect of three locations of Vivo Pizza + Pasta ("Vivo"), which were part of a chain of Italian restaurants founded by Trichilo. At the time Trichilo and Artuso were close friends and the terms on which the monies were advanced were not specified. The parties had various discussions over the months and years until October 2021 about whether the advances would be treated as loans or equity in the Vivo restaurants or some combination of these two options. I will describe below how, in October 2021, they decided the advances would be treated as loans.

[8] Trichilo founded Vivo in 2016. Vivo had grown quickly and by early 2020 there were about 15 Vivo restaurants located in Ontario and Florida. Most of the restaurants were owned by franchisees, but Trichilo's family retained ownership and control over several of the restaurants, sometimes with additional partners.

[9] In 2018 Trichilo began discussing with Artuso the possibility of Artuso investing in one or more of Vivo's locations. At the time, the Vivo restaurants were performing well, and the chain was expanding.

The Monies which were Advanced

[10] Between July 2018 and December 2019, Artuso advanced a total of $1,567,000.00 through Jaymat in respect of three new Vivo locations, as well as making two personal loans to Trichilo.

[11] Those advances, including the two personal loans, were made as follows:

• July 9, 2018: $200,000.00; paid to "Vivo Pizza and Pasta".
• November 28, 2018: $300,000.00; paid to 2415889 Ontario Inc.
• January 30, 2019: $500,000.00; paid to 2415889 Ontario Inc.; this is admitted to be a personal loan to Trichilo and related to his Florida home.
• June 6, 2019: $400,000.00; of which $367,000.00 was paid to "Vivo Pizza and Pasta" and $33,000 is admitted to be a personal loan to Trichilo.
• September 25, 2019: $450,000.00; paid to 2415889 Ontario Inc.
• December 5, 2019: $250,000.00; paid to 2415889 Ontario Inc.
• February 11, 2020: $50,000.00; paid to 2415889 Ontario Inc. to pay employees (the employees loan).

Total: $2,150,000.00

The Two Personal Loans

[12] In an email dated January 29, 2019, Artuso stated that Jaymat would advance $500,000.00 for 60 days at Trichilo's request, as a bridge loan in respect of Trichilo's purchase of his Florida home. Thus, this loan was repayable on March 28, 2019. The email did not specify an interest rate.

[13] In a separate email, Trichilo agreed to pay interest at $5,000.00 per month for the two months the loan would be outstanding. That reflects an interest rate of 12% per year.

[14] When the 60 days expired, Trichilo told Artuso that he did not have funds available for repayment.

[15] Artuso agreed to extend the time for repayment of the bridge loan to the end of that year which would have been December 31, 2019. It has not been repaid. No interest has ever been paid.

[16] Trichilo acknowledges that he personally owes that $500,000.00 and another $33,000.00 to the plaintiff. He says that the lien (which is called a certificate of lis pendens) obtained by Jaymat in Florida on May 23, 2023, prevents Trichilo from refinancing his Florida property to raise the funds to repay his personal debt to the plaintiff.

[17] Trichilo submits that no interest should be payable on the $533,000.00 after the date of registration of the lis pendens. He says that if it was not for that encumbrance on his Florida property, he would have been able to obtain financing to repay that debt.

[18] Trichilo does not, however, explain why he did not repay that debt between December 31, 2019, when the debt became repayable, and May 23, 2023, the date the Florida lis pendens was ordered.

[19] Jaymat's second personal loan to Trichilo ($33,000.00) was part of Jaymat's advance of $400,000.00 on June 6, 2019. $367,000.00 was used for the Bloor Street Vivo restaurant. $33,000.00 was used for a Kitchener Vivo in which Artuso and Jaymat had no interest. Trichilo and Artuso agreed the $33,000.00 would be considered a personal loan by Jaymat to Trichilo. Interest was not discussed. The principal has not been repaid. Trichilo admits he is liable for this sum.

Only $15,000.00 has been Repaid on any of the Advances

[20] On September 10, 2020, Jaymat was repaid $15,000. This is the only repayment Jaymat has received. Jaymat understood this was paid on account of Jaymat's February 11, 2020, employees loan of $50,000.00.

[21] Artuso says that Trichilo promised that the remaining $35,000.00 of that specific advance would be repaid by the end of 2021.

[22] Artuso says that because of the imminent repayment of the balance, he did not include the $35,000.00 in the October 2021 promissory note described below. This sum does not appear to be part of the amount expressly claimed on this summary judgment motion. This sum is not directly addressed in the amended statement of claim.

December 3, 2019, Email from Artuso

[23] The legal nature of the non-personal advances described above, specifically whether they were loans or equity or some combination, was not documented when they were made. Artuso maintains that they were always considered to be loans to Trichilo and Vivo. However, that is inconsistent with various documents, including a December 3, 2018, email he sent to Trichilo and others which stated:

[24] Although in these proceedings Artuso initially suggested there had been no discussion about the advances being considered equity rather than loans, that is obviously untrue. In this email Artuso unilaterally proposed that all advances, except the $533,000.00 personal loan"will be" equity investments in three restaurants.

[25] This, if implemented, would have resulted in a 50% equity interest in each of the three restaurants. One employee (the chef) had a right to acquire a 20% interest in the Bloor Street restaurant after the repayment of a "mortgage" in the amount of $2,200,000.00 to the partners. Artuso's reference to a "mortgage" meant a shareholder loan that would have been owed equally to Trichilo and Artuso. After the employee became eligible for the equity participation, Artuso's equity interest would have been reduced from 50% to 40%.

[26] This proposal was not implemented by any legal documents or recognized in any financial statements.

[27] When the pandemic hit around March 2020, Artuso changed tack and suggested that Jaymat's advances should be treated as debt rather than equity. Trichilo did not reject this suggestion. To the contrary, in September 2020, Trichilo's lawyers prepared draft documentation, including draft promissory notes and general security agreements, to recognize Jaymat's advances as debt. On September 30, 2020, these drafts were sent to Artuso.

[28] Artuso never provided any substantive response to those drafts, and this proposal was not implemented or recognized in any financial statements.

[29] As a result, in 2020 there were still no legal documents establishing or confirming the nature of the advances.

[30] It is worth noting that no formal legal documents were signed in respect to the two personal loans, although the related emails did confirm that the bridge loan was a loan. The parties always understood the bridge loan was not an investment in the Florida property.

[31] The second personal loan of $33,000.00 does not appear to have been reduced to writing, but the parties agree it was a loan and is still outstanding.

Artuso Insists on Specific Documents to Evidence the Advances are Loans

[32] On October 18, 2021, Artuso sent a text message to Trichilo advising that the lack of formal paperwork for Jaymat's advances was causing problems with the Canada Revenue Agency (the “CRA”). His concern was negative tax consequences if the advances were treated by CRA as gifts rather than business transactions. This was perceived to be a real risk if proper documents were not put in place.

[33] In a follow-up meeting the same day, Artuso put documents in front of Trichilo and told him that his accountants needed Trichilo to sign them. Trichilo did so without objection.

[34] One of the documents signed by Trichilo under his own name, and which also states"and the authority of Vivo Pizza and Pasta (Pino Trichilo)", contained seventeen points, some of which dealt with the tax treatment of the advances. This document references all the advances, including the personal loans. It talks about all the advances being treated as loans, but with the possibility that Jaymat could convert the non-personal loans to equity at a later stage.

[35] Trichilo now says he did not understand what he was signing. Trichilo admits, however, that, at the time he signed it, he understood that Artuso needed the document for tax purposes.

[36] Trichilo also admits he was not concerned about this because he had already sent Artuso draft promissory notes and general security agreements which would have recognized that the advances were loans, although he says his understanding was that the loans were owed only by the three restaurants.

[37] According to Trichilo, he signed this document because he trusted Artuso, they were friends, and he had no reason to suspect any "nefarious" intentions.

[38] Trichilo says he only realized later that what he calls the "strategic insertion" of his name at various points in the document was intended to set him up for the argument that he personally owed those monies to Artuso or Jaymat.

The Promissory Note

[39] Trichilo and Artuso met again on October 22, 2021. Prior to that meeting, Artuso had told Trichilo that his accountants needed him to sign a promissory note to document the debt. During that meeting, Artuso put the promissory note in front of Trichilo and told him to sign it to confirm that Jaymat's advances were repayable loans. The note consolidated all loans, except the employees advance, into one document.

[40] Trichilo says that Artuso told him that the promissory note would allow Artuso to resolve the issues raised by the CRA.

[41] Trichilo admits he signed the promissory note. He acknowledges having previously signed other promissory notes in the course of business. Trichilo says, however, that he thought he was signing this note as a representative of Vivo Pizza and Pasta. He says he did not understand that Artuso could later seek to rely on the promissory note as an acknowledgement that he personally had to repay the debt to Jaymat.

[42] The October 22, 2021, promissory note expressly provides that:

• Trichilo and Vivo Pizza Pasta Franchising Inc. would jointly and severally pay Jaymat $2,100,000.00 plus interest at 10% per annum;
• $17,500.00 per month was payable commencing January 1, 2022;
• the balance became due and payable on December 31, 2022;
• even if the application of the Promissory Note to any person or circumstance was unenforceable then the balance was still enforceable; and
• it was signed, sealed, and delivered by Trichilo in the presence of a witness. Trichilo's signature is immediately below Trichilo's printed name and above the phrase "operating as Vivo Pizza and Pasta" and then, in Trichilo's handwriting"Vivo Pizza Pasta Franchising Inc." (The latter addition is a misnomer because the proper company name ends, … Franchise Inc).

Default under the Promissory Note

[43] No monthly payment was made on January 1, 2022. No monthly payment was ever made.

[44] The promissory note matured on December 31, 2022. Nothing has been paid despite demand.

The Plaintiff's Position

[45] The plaintiff asserts that its advances were always loans and that summary judgment is appropriate because there are no genuine issues which require a trial as to whether those loans must be repaid by both defendants.

[46] It relies on the defendants' default under the October 22, 2021, promissory note and Trichilo's admissions of liability in respect of the two personal loans.

[47] It says there is no doubt that the defendants signed the note, and that payment is long overdue.

[48] The plaintiff relies on the presumption that valuable consideration was given to the defendants in exchange for the note. The plaintiff says that presumption has not been rebutted.

[49] In respect of the issue of whether consideration was given for the note, although the onus is on the defendants to rebut the presumption, the plaintiff says consideration was obviously given. It points out that the promissory note is dated October 22, 2021, and the obligation to make any payments under the note did not commence until January 1, 2022. Thus, at a minimum, the defendants received consideration in the form of forbearance of enforcement for the remainder of 2021.

[50] The plaintiff also argues that Trichilo personally received consideration for signing the note in October 2021 by virtue of the elimination of $110,000.00 in interest ($5,000.00 per month) which had accrued on the personal bridge loan since January 29, 2019.

[51] The plaintiff says Trichilo also received consideration when the payment of the $33,000.00 personal loan was deferred until the end of 2021.

[52] In summary, Jaymat relies on the note in combination with the admissions of liability for the personal loans.

The Defendants' Position

[53] The defendants agree with the plaintiffs that all issues can be determined on a motion for summary judgment.

[54] The defendants claim that in October 2021, after having seen the value of his investment evaporate with the pandemic, and under the false pretence of needing documentation for his accountants, Artuso tricked Trichilo into signing documents that purported to make him personally liable for all of the money that Artuso had invested in the Vivo restaurants. (I will discuss below if this issue can be dealt with on a motion for summary judgment.)

[55] In the alternative, the defendants say the note is not enforceable because no consideration was given for the debt referenced in the note.

[56] The defendants say that prior to signing the note, Artuso had an equity interest in, or in the alternative, was a creditor of, three Vivo restaurants that had been viciously savaged by the pandemic. Two of the three restaurants closed shortly afterwards; the restaurant that remains open continues to carry significant debt from that period. The defendants argue that all three restaurants had negative equity.

[57] The defendants say the note conferred no benefit on the restaurants. If the restaurants owed a debt to the plaintiff, the promissory note had no impact on that debt.

[58] They also argue that Trichilo personally did not benefit or profit in any way by signing the note.

[59] The defendants argue that promissory notes require some form of consideration to be valid and enforceable.

[60] They accept there is a presumption that every party whose signature appears on a promissory note received valuable consideration. They say the presumption of consideration is rebuttable and accept that the onus is on the party alleging a lack of consideration to establish that fact. Even accepting this is the law, the defendants say that the evidence rebuts the presumption that valuable consideration was given for the promissory note. Therefore, it is not enforceable. They say that judgment should issue only against Trichilo for $533,000.00 in respect of the personal loans and that judgment should be stayed pending discharge of the lis pendens from his Florida property.

Analysis

(a) Summary Judgment is Appropriate

[61] Although the parties agree that summary judgment is appropriate, I must be satisfied that there are indeed no genuine issues which require a trial.

[62] A trial is not required if a summary judgment motion can achieve a fair and just adjudication, if it provides a process that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial: Hryniak v. Mauldin, 2014 SCC 7, at para. 4.

[63] The principal goal remains ensuring a fair process that results in a just adjudication of disputes. A fair and just process must permit a judge to find the facts necessary to resolve the dispute and to apply the relevant legal principles to the facts as found. However, that process is illusory unless it is also accessible, i.e., proportionate, timely and affordable. The proportionality principle means that the best forum for resolving a dispute is not always that with the most painstaking procedure: Hryniak, at paras. 28 and 66.

[64] The standard of fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles to resolve the dispute: Hryniak, at para. 50.

[65] The parties are expected to "put their best foot forward". The court may assume that the evidentiary record is complete and that no further evidence will be produced if the issues go to trial: Broadgrain Commodities Inc. v. Continental Casualty Company, 2018 ONCA 438, at para. 7; Canada (Attorney General) v. Lameman, 2008 SCC 14, at para. 11.

[66] In determining this motion, I must first consider if summary judgment is appropriate based on the entire motion record without resorting to my enhanced decision-making powers under Rules 20.04(2.1) and 20.04(2.2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. However, if credibility issues are evident, then I have a discretion to decide them, unless it is in the interest of justice for that power to be exercised only at a trial.

[67] Although a trial should no longer be viewed as the default procedure, summary judgment is not appropriate if the credibility of the parties is squarely in issue. The more important the credibility dispute, the more likely that a trial is required: Zaky v. 2285771 Ontario Inc., 2020 ONSC 4380, at para. 18; Elliott v. MMC Marketing & Promotion Inc., 2024 ONSC 2466, at paras. 30-32; and Joshi v. Chada, 2022 ONSC 4910, at para. 66.

(b) Credibility Issues

[68] After reviewing the entire record, I concluded that there were three credibility issues that needed to be addressed if the issue of judgment (including the possibility of dismissal of the claim for the non-personal advances) was to be decided summarily.

[69] I have decided all three issues of credibility, even though the parties did not raise them as an objection to the summary judgment process and did not suggest they raised a genuine issue that required a trial. Ultimately, I agree with the parties that the summary judgment procedure is appropriate. The decision on each of these credibility issues was easy to make on the motion record for the reasons that follow.

[70] The first credibility issue is that Artuso suggested that there had been no discussion about the advances (other than the personal loans) being equity rather than loans. I have already found this to be untrue. This is a credibility finding that I can readily make on the motion record.

[71] But that is not a dispositive finding on the issues on this motion, because it is inconclusive on the question of whether the advances were for equity in one of the Vivo companies, rather than loans to that company.

[72] I accept that the parties did discuss in late 2019, as can be seen in the December 3, 2019, email quoted above, that those advances "will be" equity. But the evidence establishes that that discussion was never implemented, and subsequent discussions involved recognition of those advances as loans.

[73] It was the later discussions, about treating the advances as loans, that was finally implemented in October 2021, with the signing of the October 18, 2021 agreement (the 17-point document) and the October 22, 2021, promissory note. These documents committed the parties to a legally binding position, categorizing all advances as debt and specifying the terms for repayment. (The only exception seems to have been that the $35,000.00 employee loan which was not added into the promissory note.)

[74] It is clear that the inchoate nature of the advances was left up in the air for many months, and indeed years, after the monies were advanced.

[75] Nothing turns therefore on Arturo’s proposition that the advances were always intended to be loans. The evidence is clear that the parties did not initially agree on the legal basis on which the monies had been advanced. Artuso and Trichilo were both content with that ambiguous situation while they were still friends and the business storm clouds had not yet formed.

[76] It is also clear, however, that the legal status was resolved for the non-personal advances when the promissory note was signed, thereby confirming they were loans. The issues of who is liable to repay the monies due under the note and whether it is enforceable are discussed below.

[77] The legal status of the two personal loans had been settled before the promissory note was signed. The $500,000.00 bridge loan was agreed to be a loan from the date it was advanced. However, the parties had not agreed at the date the $33,000.00 was advanced that it was a loan. That sum arose from the June 6, 2019, advance of $400,000.00. Initially, its legal character, as a loan or equity, was not settled. The parties did agree subsequently, but well before October 2021, that $33,000.00 of that amount would be treated as a personal loan. Both personal loans were included in the debt acknowledged by the promissory note.

[78] Thus, there is no need for a trial to establish that Jaymat lent $533,000.00 to Trichilo and that he is liable to repay this sum.

[79] The second credibility issue is whether Artuso “tricked” Trichilo into signing documents that purported to make him personally liable for all of Jaymat's advances.

[80] I am satisfied that on this summary judgment motion record I can make a credibility finding that Trichilo was not tricked into signing the October 2021 documents in any legally meaningful way. This is especially true given that there is no express allegation of fraud, duress, unconscionable transaction or non est factum.

[81] Trichilo is an experienced businessman who managed to persuade Artuso to advance over $2,000,000.00 for Trichilo's business and personal use, without the usual legal documents or conventional security, in circumstances where the commercial banks would not lend Trichilo the money.

[82] Trichilo admits he had signed other, unrelated promissory notes before he signed the October 2021 note. Furthermore, both he and his companies were represented by a lawyer, Mr. Dale, from whom he had sought legal advice concerning the previous documents which had been prepared to document the loan, but not signed.

[83] Although Trichilo may allege he was tricked into signing the October 2021 documents, there is no evidence of trickery which would necessitate a trial. Trickery is not a legal concept. The statement of defence, at paras. 21-23, pleads that Trichilo had "no expectation of personal liability" in respect of the note and that the loan documents "were contrary to the understandings between the parties and the stated purpose of the promissory note" (emphasis added). The only reference to trickery is in para. 27 which pleads that Trichilo was "tricked" into converting the equity into a loan, not specifically that he was tricked into signing the note.

[84] None of the evidence filed on this motion in support of these allegations establishes any genuine issue which requires a trial.

[85] There is no "stated purpose" in the promissory note, which simply sets out the obligation to pay a specified debt on a specified timetable.

[86] Trichilo admits he signed the documents. The note was consistent with the 17-point document Trichilo had signed under oath four days earlier. Trichilo must have known that by signing both documents, he and the corporate defendant agreed to the advances being treated as loans and that both he and the corporate defendant were "jointly and severally" liable. He signed the documents and thereby agreed personally to pay the monies pursuant to the note.

[87] Trichilo must have known from reading both documents before he signed them that the purpose of the October 2021 documents was to treat the advances as loans which he personally had to repay. If he did not read them, that is no excuse.

[88] The principal sum of the promissory note was no surprise to him because it matched the total advances he and his companies had received.

[89] There is no evidence of fraud or fraudulent misrepresentation or duress or any other legal doctrine that requires a trial of Trichilo's bald allegation of "trickery". I readily reject his allegation of "trickery" subject only to my discussion of the third credibility issue below.

[90] The third credibility issue is whether Trichilo signed the promissory note only as a representative of the corporate defendant or whether he signed on behalf of both the corporate defendant and himself personally. This is only a credibility issue if Trichilo’s evidence on this point is relevant to the underlying issue of the legal effect of his signature on the documents which he admittedly signed.

[91] Para. 26 of the statement of defence pleads that Trichilo did not believe he was taking on any amount of the "restaurant loan" as a "personal debt". He does not plead in his defence that he only signed on behalf of the corporate defendant or any other company. As already noted, his position is that he was tricked into assuming personal liability. I have rejected that assertion. I find that his belief is irrelevant.

[92] Trichilo's signature on the note carries with it some degree of ambiguity because it only appears once. One might have expected him to sign in two places, once on behalf of the corporate defendant (or other corporate debtor) and a second time to signify his personal obligation to repay the debt.

[93] I do not find, however, that this raises any credibility issue, because Trichilo's only signature is found below his printed name, which supports the legal conclusion of personal liability. His signature is above the phrase "operating as Vivo Pizza and Pasta", which is also consistent with personal liability, in that the phrase may be a business name but it is not an express reference to a corporation.

[94] Below that phrase Trichilo added in handwriting "Vivo Pizza Pasta Franchising Inc.".

[95] This addition is, of course, consistent with the signature being given on behalf of the corporation, although he got the name of the corporation wrong (it should end …Franchise Inc.).

[96] This point does not support a conclusion that the signature was only on behalf of the corporation, however, because the signature section must be read in the context of the promissory note as a whole. The first two lines of the note make it clear the there are two joint and several payors, namely, Trichilo and Vivo Pizza and Pasta Franchising Inc.

[97] I conclude therefore that Trichilo's one and only signature at the end of the note was made on behalf of and committed both payors, i.e., both defendants.

[98] I find, therefore, that this manner of signature does not give rise to an issue which requires a trial.

(c) Is the Promissory Note Enforceable?

[99] As none of the credibility issues require a trial, I must now determine whether the promissory note is unenforceable. The parties agree that this can be decided by way of a motion for summary judgment. I agree.

[100] The applicable law is settled and not in dispute. Promissory notes require some form of consideration to have been provided to be valid and enforceable.

[101] There is, however, a presumption that every party whose signature appears on a promissory note received valuable consideration. The presumption that consideration was provided is rebuttable. The onus is on the party alleging a lack of consideration to establish that fact: Mora v. Mora, 2011 ONSC 2965, at para. 30; Sluyter Capital Investments Inc. v. 1902408 Ontario Limited, 2021 ONSC 5549, at paras. 117-119.

[102] Thus, the question is whether either or both of the defendants can establish that they received no consideration for signing the note.

[103] For the reasons that follow, I find that both defendants received consideration for signing the note and assuming liability to pay the full amount of the advances. It is not for the court to assess the business prudence of the deal, or to put it in legal terms, to assess the sufficiency of the consideration. The note may therefore be enforced against both defendants.

(d) Section 52 of the Bills of Exchange Act

[104] Section 52(1) of the Bills of Exchange Act, RSC 1985, c B-4, provides that “[v]aluable consideration for a bill may be constituted by (a) any consideration sufficient to support a simple contract; or (b) an antecedent debt or liability.”

[105] The plaintiff says that both limbs of section 52(1) apply here, and they should be applied in conjunction with the settled law that a promise to forbear from taking steps to enforce a debt or limiting the amount of the debt owed is sufficient consideration: Sluyter, at paras. 117-119; 1485625 Ontario Inc. v. Peel Halton Kitchens Inc., at paras. 12 and 14-15.

(e) Consideration that was given to Trichilo

[106] Trichilo concedes that, at least since December 2019, he was personally liable to pay the $500,000.00 he borrowed as a bridge loan in January 2019. (As noted above, Trichilo initially agreed interest would accrue at a rate of $5,000.00 per month and the loan would be repaid on March 28, 2019, two months later. The repayment date was subsequently extended to December 31, 2019.)

[107] Therefore, immediately before the promissory note was signed on October 22, 2021, the loan was past due, interest on the personal bridge loan had accrued for some 20 months and would have continued to accrue at the rate of $5,000.00 per month, i.e., 12% per annum if the note had not been signed. (There is no suggestion that this advance was equity in the home or an interest free loan.)

[108] Thus, when this personal loan was incorporated into the monies re-payable pursuant to the note, the effect was that the repayment and interest terms were improved, and the result was that consideration was given to Trichilo. In short, a loan which was long overdue, with accrued interest of $110,000 and an interest rate of 12% was converted into a loan for which the accrued interest was written off, the interest rate was reduced to 10% with no payment at all for three months, and the balance was not due for some twenty months.

[109] The defendants point out that the promissory note on its face simply provides for a debt obligation in the amount of $2,100,000.00 without specifying the source of the debt or how the amount of the debt was calculated. That is true, but those details are dealt with in the October 18, 2021, memo signed by both Trichilo and Jaymat.

[110] While the note does not expressly forgive the accrued interest on the bridge loan, the October 18, 2021, memo and schedule make it clear that the note, which was signed four days later, covered the personal loan. Accrued interest was forgiven. It would have been impossible for Jaymat to have argued otherwise if it had attempted to claim those arrears in the face of the signed note. It would have been equally impossible for Jaymat to have sued Trichilo on the personal debt in, say, November after signing the note on October 22, 2021, and thereby postponing the due date.

[111] While the parole evidence rule applies in the context of an action to enforce a promissory note, it does not assist the defendants because the terms of the note and the earlier memo are consistent: Latner Estate v. Latner, 2016 ONSC 364, 129 O.R. (3d) 283, aff'd 2017 ONCA 859. There is no question here of using "evidence outside the words of the written contract […] that would add to, subtract from, vary or contradict a contract that has been wholly reduced to writing": Latner Estate, at para. 30.

[112] There is no merit to Trichilo's argument that he did not receive any right, interest, profit or benefit from “trading a $533,000.00 debt for a $2,100,000.00 debt for which he was not previously liable”.

(f) Consideration that was given to the Vivo Corporate Defendant

[113] The plaintiff's arguments focused on Trichilo's personal liability. For reasons set out above I have already accepted that Trichilo received consideration and is personally liable under the note. But this raises the question: how did the corporate defendant benefit from signing the note?

[114] The defendants say that even if the advances were a loan to the “three restaurants”, the promissory note did not reduce or eliminate any debt owed by the restaurants to the plaintiff.

[115] I have found, however, that the parties did not crystallize the legal character of the advances as debt or equity, or some combination, until October 2021. Until the note was signed the advances were an antecedent debt or liability, as referenced in section 52(1)(b) of the Bills of Exchange Act.

[116] In October 2021, Trichilo agreed that Jaymat's advances were all in the nature of debt and Jaymat did not have any equity. Thus, Trichilo decided at that time he and his family would retain 100% of the equity in the Vivo corporations. While Trichilo argues now that this was obviously a bad deal and could not be counted as consideration because the restaurant business had been decimated by Covid, that was a business decision he made, presumably influenced by his personal relationship with Artuso.

[117] It is also worth noting that some parts of the Vivo restaurant chain are still in business. It is not for this court to assess the adequacy, as opposed to the legal sufficiency, of the consideration which was given for the promissory note transaction. The question for this court is whether each defendant received any consideration for signing the promissory note.

[118] There is no dispute that Jaymat advanced all the monies referenced in para. 11 above on the dates specified. Before the note was signed the first $200,000.00 of the non-personal advances had been made to "Vivo Pizza and Pasta" and the balance to 2415889 Ontario Inc. (“241 Ontario”).

[119] I have found that until October 2021 the parties had not yet settled whether the advances were debt or equity. It is also true that they had not yet settled who was liable to repay the monies assuming they were treated as debt or, if they were equity, how much equity would be provided in which companies, although a structure for the equity alternative had been proposed by Arturo in his December 3, 2019 email, and a structure for the debt alternative had been proposed by Trichilo in the draft documents produced in September 2020.

[120] The promissory note established for the first time that the only corporation which was liable, in addition to Trichilo, for what was now established to be debt, not equity, was the Vivo corporate defendant. Consideration was granted in the form of recognition of the antecedent debt or liability which was now recognized as debt. Furthermore, no interest was payable before October 22, 2021, on the advances which had been made in 2018-2019.

[121] Consideration was also provided when Jaymat effectively waived interest before October 22, 2021, and postponed liability of the entire debt for another twenty months.

[122] Even if the bulk of the monies could have been found to have been payable by 241 Ontario before the note was signed, the terms of the note benefited that company by removing its potential liability. This is not expressly stated in the note, but again it is obvious that, after the note and the memo were signed, the plaintiff could not have claimed the money from 241 Ontario. Thus, the note benefitted a third party (241 Ontario) related to the Vivo corporate defendant, and this constituted sufficient consideration for the note, as established in Sluyter and Peel Halton Kitchens.

[123] I have already found that the note was duly executed on behalf of the Vivo corporate defendant, as well as by Trichilo in his personal capacity. I find that the note is enforceable against the Vivo corporate defendant which is jointly and severally liable for this debt.

[124] If I am wrong in the conclusion about the signature binding the company, then, in the alternative, I would have found that Trichilo signed the note solely in his personal capacity. In that case, the Vivo corporate defendant would not be liable pursuant to the note, and the claim against it would have been dismissed.

[125] I do not need to find for present purposes what was agreed between the parties with respect to the $35,000.00 employee loan, which was not wrapped into the note. That issue was not properly pleaded by the parties, and I do not decide whether those monies are payable.

Conclusion

[126] In conclusion:

(a) Leave is granted to amend the statement of claim in the form filed, and specifically to amend the title of the proceeding to name the corporate Defendant "Vivo Pizza Pasta Franchise Inc." rather than Vivo Pizza Pasta Franchising Inc.

(b) Judgment is granted to the plaintiff against both defendants for $2,100,000.00 plus interest at 10% per annum from January 1, 2022, to the date of payment;

(c) I am not granting summary judgment for the $35,000.00 claimed for breach of contract related to the employees loan. This sum is not expressly claimed in the amended statement of claim or notice of motion, although it was referenced in the amended factum.

(d) I have not considered the plaintiff's late blooming argument that Trichilo might be liable pursuant to s. 21(1) of the Business Corporations Act, RSO 1990, c B.16 for having executed a contract on behalf of a corporation that has never come into existence. This was not pleaded and indeed was raised for the first time in the plaintiff's factum on this motion.

(e) There shall be no stay of or allowance for interest accruing on any part of the debt after the date the lis pendens was registered against the Florida home.

[127] If the parties cannot agree on costs the plaintiff shall deliver written costs submissions not to exceed three double spaced pages within ten days. Any offers to settle should also be attached. The defendant shall have ten days to deliver its own written costs submissions, not to exceed three double spaced pages plus any relevant offers to settle. There shall be no right of reply. Both sides have already filed Bills of Costs, and these will also be considered.

Justice C. Stevenson
Released: February 14, 2025