Atwal v. Manu, 2025 ONSC 3468

CITATION: Atwal v. Manu, 2025 ONSC 3468

COURT FILE NO.: CV-17-00000218-0000

DATE: 2025-06-13

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Darshan Atwal

Plaintiff

– and –

Amandeep Singh Manu

Defendant

Derek Sinko, for the Plaintiff

Sharoon Gill, for the Defendant

HEARD: May 15, 16, and 22, 2025 at Brantford

The Honourable justice l. bale

reasons for judgment

Overview

1The issue for determination by this court is whether the sum of $100,000 advanced by the plaintiff, Darshan Atwal, to the defendant, Amandeep Singh Manu, on or about January 24, 2013, was a loan between the parties or partial repayment of a loan owing by the plaintiff’s spouse to the defendant. If the court is not satisfied that the payment was either of those things, the court is asked to consider, in the alternative, whether the defendant was unjustly enriched by his receipt of this payment.

The Undisputed Facts

2The plaintiff, Darshan Atwal, is married to Balwinder Atwal. Amardeep Atwal is their son.

3Mrs. Atwal had six siblings. The defendant, Amandeep Manu, is one of her brother’s sons.

4In 2007, the defendant went into business, a pizza store, with Gurpal Manu. Gurpal Manu is one of Mrs. Atwal’s brothers (not the defendant’s father). Their business relationship deteriorated.

5In March 2012, a document was signed in India which has become relevant to the dispute before this court. The document has been referred to in these proceedings as the “Pizza Store Agreement”. The Pizza Store Agreement was signed by the defendant, Mrs. Atwal, and four other extended family members. The plaintiff and Gurpal Manu were not present and did not sign the Pizza Store Agreement.

6In essence, the Pizza Store Agreement purports to require Mrs. Atwal to take responsibility for payment of $225,000 to the defendant by November 20, 2012 for the transfer of the defendant’s interest in the pizza store to Gurpal Manu.

7Mrs. Atwal did not pay $225,000 to the defendant.

8On January 24, 2013, at the request of the plaintiff, the plaintiff’s son deposited the sum of $100,000 from the bank account of the plaintiff into the bank account of the defendant by way of bank draft.¹ The description line of the bank draft is marked “Loan Advanced – Short Term”.

9On or about July 5, 2017, the plaintiff commenced a statement of claim against the defendant seeking repayment of the $100,000 advanced in January 2013. The plaintiff claims that the amount advanced was a loan and seeks repayment of same with interest. In the alternative, the plaintiff pleads unjust enrichment.

10On or about August 28, 2017, the defendant filed a statement of defence. Within his statement of defence, he pleads:

1. That the plaintiff’s claim is statute-barred by the Limitations Act; and

2. Legal and equitable set-off with respect to the funds owing to him by Mrs. Atwal.

11The defendant also issued a counterclaim, adding Mrs. Atwal as a third-party defendant and seeking payment of the remaining $125,000 allegedly owing to him under the Pizza Store Agreement.

12On August 9, 2019, the defendant’s counterclaim was dismissed by way of order for partial summary judgment. The court noted that the defence of set-off remained available to the defendant: see Atwal v. Manu, 2019 ONSC 1.

Positions of the Parties

13The plaintiff asserts that the payment of $100,000 was a demand loan.

14The plaintiff’s evidence is that, in or around December 2012, the defendant and his cousin, Amarjit Randhawa, began visiting him at his farm requesting to borrow money to buy a tractor-trailer truck for his business. After several visits, the plaintiff agreed. At his instruction, his son transferred $100,000 into the defendant’s account. The plaintiff’s understanding of the arrangement was memorialized on the re: line of bank draft as “Loan Advanced – Short Term”. He advises that he was never advised of any pre-existing obligation by his spouse to pay money to the defendant and that any such agreement played no role in his decision to lend money to the defendant. He did not consult with his spouse in lending $100,000 to the defendant. Demand for repayment was made in April 2017. When no payment was made, the plaintiff commenced this claim.

15The defendant disputes that the payment of $100,000 was a loan. Rather, he asserts that the payment was partial payment owing to him by Mrs. Atwal under the Pizza Store Agreement.

16The defendant’s evidence is that he repeatedly asked Mrs. Atwal for payment of the $225,000 he was owed under the Pizza Store Agreement. Mrs. Atwal continued to promise payment. The defendant asked his cousin Amarjit for help in receiving payment. On or about January 24, 2013, Amarjit called him to tell him that $100,000 had been deposited into his bank account. He confirmed receipt of this amount but did not receive a copy of the bank draft which specified “Loan Advanced – Short Term”. Afterwards, Mrs. Atwal told him she would pay the remaining balance within two to three months because she needed to save money for her daughter’s upcoming wedding. She never paid the balance.

The Law and Application

17The court is asked to decide whether the sum of $100,000 advanced to the defendant by the plaintiff on January 24, 2013 was a loan from the plaintiff to the defendant, or a partial payment of a financial obligation owing by the plaintiff’s spouse to the defendant arising from the Pizza Store Agreement.

The $100,000 Advance

18There is no written contract between the parties which explains the nature of the advance of $100,000 on January 24, 2013.

19The burden of proving an agreement is upon the party seeking to prove its existence. The standard is the balance of probabilities. Where the court cannot determine what agreement the parties have made, there is no enforceable contract.

20It is trite that binding contracts require the parties to have reached agreement on the essential terms. For a contract to exist, there must be a meeting of minds. The test is an objective one – would an objective, reasonable bystander conclude that, in all the circumstances, the parties intended to contract? An intention alone is insufficient to create an enforceable agreement; it is necessary that the essential terms of the agreement are also sufficiently certain: UBS Securities Canada, Inc. v. Sands Brothers Canada, Ltd., 2009 ONCA 328, 95 O.R. (3d) 93, at para. 47.

21In this case, it is obvious that both parties intended the defendant to receive $100,000. Payment was made to the defendant at the direction of the plaintiff, and the defendant did not reject the money. What is less clear are the terms of repayment, if any. It is not controversial that there was no prescribed repayment date and no agreed-upon rate of interest. The plaintiff asks the court to accept that the monies advanced were a short-term loan, payable on demand. The defendant asks the court to accept that there was no agreement that the money would ever be repaid to the plaintiff because it was owed to him by the plaintiff’s spouse.

22The fact that an agreement is not reduced to writing is not necessarily fatal, as long as the terms and conditions of the agreement are clear. When dealing with oral agreements:

a. It is necessary to distill from the words and actions of the parties what they intended;

b. Evidence of the parties’ subjective intentions has no independent place in determining the terms of their bargain;

c. The test of what the parties agreed to requires objective determination; and

d. The contract must include the requisite elements of offer acceptance and consideration.

See: S & J Gareri Trucking Ltd. v. Onyx Corporation, 2016 ONCA 505, at para. 7.

23I am satisfied, on a balance of probabilities, that the $100,000 advanced to the defendant by the plaintiff in January 2013 was a loan, intended to be repaid to the plaintiff on an undefined date in future. As is often the case with oral agreements, the evidence was less than perfect. However, in this case, the balance of convenience favours the plaintiff.

24As a general proposition, the law presumes that gratuitous transfers between individuals are not intended as gifts: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 24. The defendant does not assert that the plaintiff gifted him $100,000. However, it is evident that at no time was the plaintiff in a position of indebtedness to the defendant. In this context, commonsense and objective reasonableness favour the narrative of the plaintiff over that of the defendant. Outside of the competing narratives of the parties and witnesses, the only confirmatory evidence offered by either side is the presence of the bank draft for $100,000 with the notation “Loan Advanced – Short Term”.

The Pizza Store Agreement

25The Pizza Store Agreement was committed to writing and signed by Mrs. Atwal and the defendant in the presence of witnesses. Notwithstanding these formalities, there are numerous problems with the agreement, including but not limited to the following:

1. Parties: The Pizza Store Agreement purports to have Mrs. Atwal make payment of $225,000 to the defendant in exchange for the transfer of the defendant’s interest in the pizza store to Mrs. Atwal’s brother, Gurpal Manu. However, Gurpal Manu was not present in India and did not sign the Pizza Store Agreement. The defendant does not assert that Mrs. Atwal had any authority to negotiate on behalf of Gurpal Manu or to bind his interests.

2. Condition Precedent: Without authority to bind Gurpal Manu’s interests, the Pizza Store Agreement was contingent upon Gurpal Manu agreeing to the purchase of the defendant’s interest in the business by his sister, Mrs. Atwal, on his behalf. An agreement that is subject to a contingent condition is not fully binding until the specified event occurs. A condition precedent is one that is agreed to by the parties and is about a “future uncertain event, the happening of which depends entirely on the will of a third party”: Turney v. Zhilka, 1959 CanLII 12 (SCC), [1959] S.C.R. 578, at p. 583. The evidence before the court is that Gurpal Manu did not accept the arrangement proposed in the Pizza Store Agreement.

3. Guarantee: A guarantee is an undertaking given by a third party to guarantee the performance of an existing obligation of another person to that third party. In identifying the existence of a guarantee, the critical point is that the guarantee must be a secondary form of liability in the sense that it secures the obligation of another person who has a primary liability to the third party. The guarantor’s liability is contingent upon the principal debtor’s failure to discharge the obligation to repay the money to the third-party creditor: John D. McCamus, 4^th ed., The Law of Contracts (Toronto: Irwin Law, 2005), at page 165. The defendant has failed to establish that Gurpal Manu owed a primary liability to the defendant. No documentary evidence was produced which would suggest that any formal arrangement has ever been reached between the defendant and Gurpal Manu. It follows that the defendant has failed to establish that Mrs. Atwal could be liable as a guarantor.

4. Consideration: Consideration between parties is required to create binding contracts. Consideration can take multiple forms (e.g., money, benefits, etc.) and the law typically does not concern itself with the adequacy thereof. As long as there is consideration, the court leaves it to the parties to form their own judgment and make their own bargains: Brant Securities Limited. v. Goss, 2025 ONCA 8, at para. 8. Even if Gurpal Manu was not a requisite party to the agreement, and/or his approval of the agreement was not a condition precedent, and/or the agreement was not a guarantee of a payment owing by him, the Pizza Store Agreement lacks consideration. The defendant acknowledges that no tangible consideration flowed to Mrs. Atwal. Rather, the defendant argues that the prospect of peace for the family was the consideration which was to benefit Mrs. Atwal. Family peace is not referenced within the Pizza Store Agreement. I am not satisfied that the prospect of same constitutes consideration in the circumstances of this case.

26I am not satisfied that the Pizza Store Agreement was legally binding upon Mrs. Atwal. The defendant may have felt that he was owed money by his Mrs. Atwal under the terms of the Pizza Store Agreement, but this belief is insufficient to create a legally enforceable contract.

27In this context, I find that it is more probable that the plaintiff advanced a loan to the defendant than payment on an agreement that was not legally binding against his spouse.

Guarantee by the Plaintiff

28The defendant asserts that the plaintiff assumed liability for the debt owing to him by Mrs. Atwal. A guarantee must be in writing, as required by section 4 of the Statute of Frauds, R.S.O. 1990, c. S. 19. It is common ground that the plaintiff never reduced a guarantee of the Pizza Store Agreement payment allegedly owed by his spouse to writing.

29There was no legally binding guarantee of the debt allegedly owing by Mrs. Atwal by the plaintiff.

Credibility and Findings

30The defendant argues that this case is a contest of credibility, and that the court must simply decide which party’s narrative is true. The defendant relies on the considerations articulated by Chappel J. in Al-Sajee v. Tawfic, 2019 ONSC 3857, at para. 42, regarding assessment of credibility. I pause to note that the court is not limited to wholesale acceptance of any party’s testimony over the other; it is open to the court to accept none, part, or all of a witness’s evidence, and to attach different weight to different parts: DCP(PEI) v. E.W. & Ors, 2021 PECA 3, at para. 67.

31This case was brought under the simplified rules. The evidence-in-chief of all witnesses was presented in affidavit form. In this case of an oral agreement, where credibility is of central importance, this had a somewhat limiting effect. In particular, it limited the court’s ability to compare the presentation of each witness’s evidence in direct and cross-examination and provided lesser opportunity for internal inconsistencies to present themselves for assessment. Little to no gain was made in relation to any witness in cross-examination (i.e., most answers were simply “no” or “I don’t recall”), and the court was essentially left with competing affidavits. Nevertheless, I make the following observations and findings as to the presentation of the evidence and the witnesses’ credibility:

1. The Plaintiff: The plaintiff’s evidence-in-chief was not shaken in cross-examination. The plaintiff’s evidence as to whether or not the defendant and his cousins attended his daughter’s wedding was inconsistent with other witnesses. However, this was a peripheral matter and does not impact the reliability of the plaintiff’s evidence on the material issues. I found the Plaintiff to be generally credible. I accept his evidence that the defendant asked him for a loan multiple times and that eventually he agreed.

2. Amarjit Randhawa: Although Mr. Randhawa’s in-chief affidavit was clear, his oral evidence was disjointed and confusing. The court formed the impression that Mr. Randhawa was attempting to minimize his role in and his understanding of the dispute between the parties. Although I did not get the sense that Mr. Randhawa was being deliberately evasive or untruthful, I did not find his evidence particularly compelling. If indeed Mr. Randhawa was acting as an intermediary between the family members, facilitating discussions and financial payments, it is easy to see how messages could be distorted.

3. Amardeep Atwal: The evidence of Mr. Atwal did not conflict in any significant way with other witnesses. He testified in a straightforward manner and his evidence did not change under cross-examination.

4. Balwinder Atwal: I found the evidence of Mrs. Atwal to be compelling. She listened carefully to the questions posed in cross-examination, gave responsive answers, and acknowledged when the information sought was outside of her knowledge base or recollection. In particular, I accept Mrs. Atwal’s evidence that after signing the Pizza Store Agreement she spoke with her brother Gurpal Manu, who expressed his displeasure with her efforts to negotiate on his behalf. I accept Mrs. Atwal’s evidence that the following day she communicated to Mr. Randhawa and other family members that there was no agreement. I also accept that she thereafter did not tell her husband about this event. Mrs. Atwal testified that she had no knowledge that the defendant continued to hold her responsible for payment until she was served with his counterclaim. I accept this evidence as true.

5. The Defendant: Although there were no obvious inconsistencies between the defendant’s in-chief affidavit evidence and his evidence given under cross-examination, there were two areas of his evidence which cause the court concern. First, it is significant that the defendant gave no evidence at all as to any discussions between himself and the plaintiff leading to the payment of $100,000 to him in January 2013 or after receipt. This is, in my view, a material omission when considered in the context of the evidence given by his witness Gurpal Randhawa. If the defendant had any discussions with the plaintiff regarding the nature of the payment prior to or after January 2013, as is asserted by his non-party witness, that evidence should have been put before the court. Second, I find it inconceivable that the defendant has no recollection of how he spent the $100,000 advanced to him by the plaintiff. I accept the evidence of the plaintiff and Mr. Amarjit Randhawa that the funds were required to facilitate the purchase of a tractor-trailer for his business, and I find that the defendant intentionally evaded answering this question so as not to acknowledge the accuracy of this information.

6. Gurpal Randhawa: I reject the evidence of Mr. Randhawa where it conflicts with the evidence of the plaintiff’s witnesses. I do not accept that Mr. Randhawa ever made or was present for demands for money made by the defendant by the plaintiff. I am concerned that this evidence first materialized on the eve of trial, almost seven years after the litigation was commenced, only after caselaw regarding the limits of equitable set-off was produced. The inconsistency between the affidavits of Mr. Randhawa and the defendant on this material issue is of significant concern. In particular:

i. Mr. Randawa states, “I also went to Darshan’s and Balwinder’s house in about winter, 2013 (around October/November 2013) to meet with Balwinder (and Darshan) and ask for the balance of the funds ($125,000). Amandeep and Amarjit went with me. While we were at Darshan’s and Balwinder’s house, Darshan asked to speak with us separately (away from Balwinder) and assured us that he would pay the remaining $125,000…”

ii. By contrast, the defendant’s affidavit is silent about ever asking the plaintiff directly for payment of money. The court’s attention was drawn to the following exchange during the defendant’s examination for discovery held on June 6, 2018:

178. Q. In your talks with Balwinder, did she say that this money was going to be for the pizza store agreement?

A. Yes.

Q. Did you have any talks with Mr. Atwal with Darshan –

A. No, it was only –

Q. – about this money?

A. No.

Q. No?

A. No.

7. Sumit Manu: The evidence of Mr. Manu had no bearing on the issues in this litigation. His affidavit evidence primarily repeated information that the defendant told him and was of little evidentiary value.

32I do not accept that this court’s function is a simple wholesale acceptance of one party’s version of facts over the other. Instead, I make the following findings:

1. Mrs. Atwal did not owe an enforceable debt to the defendant.

2. The plaintiff did not owe an enforceable debt to the defendant.

3. In December 2012, the defendant made multiple requests for money from the plaintiff.

4. The defendant promised to repay the plaintiff if the plaintiff agreed to give him money.

5. In January 2013, the plaintiff decided to loan the defendant money.

6. On January 24, 2013, the plaintiff arranged to have $100,000 deposited into the bank account of the defendant.

7. The plaintiff did not guarantee any monies purportedly owing by Mrs. Atwal to the defendant.

8. The plaintiff did not agree to pay any money to the defendant on Mrs. Atwal’s behalf.

9. The plaintiff intended the money advanced to the defendant to be a loan.

10. The plaintiff expected repayment, at a future date to be determined.

11. The money was not advanced as a gift.

12. The defendant understood that the money advanced was a loan.

13. The defendant chose to reclassify the nature of the payment after it was received, because he felt he was entitled to it.

14. When the demand for repayment was made, the defendant refused.

Demand Loans

33Where no term is fixed for repayment of a loan, and no other terms are mentioned, the loan is repayable on demand: T.O. Estate v. D.O., 2024 ONCA 603, at para. 38.

34The limitation period for demand loans is the first day on which there is failure to perform the obligation, once a demand for performance is made: Limitations Act, 2002, S.O. 2002, c. 25, Sched. B, s. 5(1)(a)(i). In other words, a demand is a condition precedent of the commencement of the limitation period for demand loans: Bank of Nova scotia v. Williamson, 2009 ONCA 754, 97 O.R. (3d) 561, at paras. 18-19.

35The plaintiff’s demand for payment was made in April 2017. Litigation was commenced in July 2017. The plaintiff’s claim is not statute-barred by the Limitations Act.

Legal and Equitable Set-Off

36The defendant has pleaded legal and equitable set-off of any amount owing to the plaintiff as against funds which were due and owing to him under the Pizza Store Agreement. Under s. 111 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, in an action for payment of a debt, the defendant may, by way of defence, claim the right to set off against the plaintiff’s claim a debt owed by the plaintiff to the defendant.

37Under legal set-off, two liquidated debts may be set-off against each other where there is mutuality (i.e., the debts are between the same parties and in the same capacity). In equitable set-off, both liquidated and unliquidated claims may be set-off regardless of mutuality where the transactions or dealings are so inseparably connected that it would be manifestly unjust to allow the plaintiff to enforce payment without taking into consideration the cross-claim: Scott v. Golden Oaks Enterprises Inc., 2024 SCC 32, at paras. 90-91. The relevant principles governing equitable set-off were articulated in Holt v. Telford, 1987 CanLII 18 (SCC), [1987] 2 S.C.R. 193, at p. 212:

1. The party relying on a set-off must show some equitable ground for being protected against his adversary’s demands;

2. The equitable ground must go to the very root of the plaintiff's claim before a set-off will be allowed;

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;

4. The plaintiff's claim and the cross-claim need not arise out of the same contract; and

5. Unliquidated claims are on the same footing as liquidated claims.

38In this case, even if the court were satisfied that Mrs. Atwal owed a debt to the defendant, the transactions are not so inseparably connected that it would be manifestly unjust to allow the plaintiff to enforce payment on the loan without taking into consideration the Pizza Store Agreement. The plaintiff had no involvement in the Pizza Store Agreement. It was signed in his absence, in another separate country, and related to business assets in which he holds no interest. It would not be equitable to order set-off in the circumstances of this case.

Unjust Enrichment

39In the event that I am incorrect in finding that there was indeed a meeting of the minds sufficient to create a demand loan agreement, I accept the plaintiff’s alternative argument for unjust enrichment. At the heart of unjust enrichment lies the notion of restoring a benefit which justice does not permit one to retain: Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, 1992 CanLII 21 (SCC), [1992] 3 S.C.R. 762, at p. 788. Recovery for unjust enrichment is permitted where a plaintiff establishes three elements:

1. an enrichment of or benefit to the defendant;

2. a corresponding deprivation of the plaintiff; and

3. the absence of a juristic reason for the enrichment.

See: Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 32.

40In this case, the plaintiff establishes all three elements with ease. The plaintiff has been deprived of $100,000. The defendant has received and retained the plaintiff’s $100,000. At the same time, the defendant also continues to maintain his ownership interest in the pizza store. All parties agree that the plaintiff did not gift the defendant $100,000. As explained above, there is no satisfactory reason in law or justice for the defendant to retain the plaintiff’s funds. The remedy is to require the defendant to repay the amount to reverse the unjustified enrichment. I am satisfied that the limitation period for the plaintiff’s unjust enrichment claim did not commence until the defendant omitted to pay the amount back, when requested in 2017, and likewise that the claim is not statute-barred: McConnell v. Huxtable, 2014 ONCA 86, 118 O.R. (3d) 561, at para. 52.

Conclusion

41For the reasons above, judgment is granted in favour of the plaintiff in the amount of $100,000, plus prejudgment interest at the applicable Courts of Justice Act rate from the date of the claim, and post-judgment interest at the applicable Courts of Justice Act rate. Further, as agreed at the outset between the parties, the plaintiff, as the successful party, is entitled to costs fixed in the sum of $35,000, inclusive of HST and disbursements.

L. Bale, J.

Date Released: June 13, 2025

CITATION: Atwal v. Manu, 2025 ONSC 3468

Footnotes

1. 1The bank account was jointly held by the plaintiff and his son.