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Creditors & Debtors Law - Proceedings - Appeals and judicial review - Practice and procedure - Parties - Standing - Evidence

Thursday, September 01, 2016 @ 8:00 PM  


Appeal by the defendant, Darc, from a summary trial order requiring repayment of three loans to the plaintiff, Strother. The parties were longstanding friends and business partners. In the past, the defendant provided financial assistance to the plaintiff and his wife during litigation that temporarily froze the plaintiff’s assets. In 2012, the defendant was in need of cash. The plaintiff made three loans to the defendant totaling $445,000. The first loan of $300,000 was made in September 2012 and evidenced by a promissory note that contemplated repayment upon the earlier of the sale of the defendant’s property, or August 31, 2013. The second loan of $100,000 was made in May 2013 and the third loan of $45,000 was made in August 2014. The second and third loans were not evidenced by a promissory note. The plaintiff sued to recover repayment. The defendant submitted that the first and third loans were advanced by the plaintiff’s holding company and therefore could not be enforced by the plaintiff in his individual capacity. The defendant further submitted that the promissory note was unenforceable for lack of consideration flowing from the plaintiff. The defendant contended that repayment was voluntary based on a collateral oral agreement. The summary trial judge rejected the defendant’s position, finding that the primary debtor and creditor relationship was between the parties, and directing repayment. The defendant appealed.

HELD: Appeal dismissed. The trial judge did not err in finding the plaintiff had standing to sue to enforce the first and third loans. The promises of advancement and repayment were made by the parties. The plaintiff caused the monies to be advanced. The fact that he did so by causing his holding company to write the cheque was of no moment, as found by the trial judge. The trial judge properly found that the defendant’s focus on the source of the funds rather than the bargain between the parties was overly narrow. The trial judge did not err in declining to find a collateral oral umbrella agreement providing for voluntary repayment, as any such agreement contradicted the written terms of the promissory note, and was not referenced by the parties in their communications. The trial judge did not err in determining the interest payable on the first loan. The summary trial judgment was thus affirmed.