



COURT OF APPEAL FOR ONTARIO

CITATION: Friendly v. Elkind, 2014 ONCA 406

DATE: 20140520

DOCKET: C58057

Gillese, van Rensburg and Hourigan JJ.A.

BETWEEN

Lynda
    Friendly and

Lynda Friendly &
    Associates

Applicants (Respondents)

and

Manuel Elkind
and

1671379 Ontario Inc.

Respondents (
Appellant
)

Gary S. Joseph and Kristy Maurina, for the appellant

Elliott S. Birnboim and Gargi Chopra, for the respondent

Heard: May 6, 2014

On appeal from the order of Justice Nancy L. Backhouse of
    the Superior Court of Justice, dated November 22, 2013 and on leave to appeal
    the cost order of Justice Nancy L. Backhouse of the Superior Court of Justice,
    dated January 9, 2014.

ENDORSEMENT

[1]

This is an appeal from the order of Backhouse J. dated November 22,
    2013, granting summary judgment requiring the appellant to repay the sum of
    $195,538.98 to the parties joint line of credit, and payment of $10,000 plus
    interest to the corporate respondent. The appellant also seeks leave to appeal
    a costs award in the sum of $40,000.

[2]

The appellant Manuel Elkind and the personal respondent Lynda Friendly
    are engaged in matrimonial proceedings. Ms. Friendly owns the matrimonial home
    at 56A Oriole Road, Toronto, against which is registered a joint line of
    credit. Pursuant to a marriage contract, Mr. Elkind has the right to be paid
    his proven contribution to the matrimonial home plus one half of any balance
    after Ms. Friendlys initial contribution and the balance due on the line of
    credit, and Ms. Friendly has the right to require a buyout of her 40% interest
    in 1671379 Ontario Inc. (167), which is owned 40% by each of the parties and
    20% by the appellants children. The major asset of 167 is a development property
    located on Welland Avenue, St. Catharines.

[3]

Between 2008 and 2012 the appellant withdrew funds from the joint line
    of credit for his personal and business uses, at times without Ms. Friendlys
    knowledge or consent. He signed a number of documents promising to repay the
    amounts, and it is in respect of these debts, as well as a promissory note in
    favour of the corporate respondent, that summary judgment was sought by the
    respondents and granted by the motion judge.

[4]

The appellant does not contest the source and amount of the funds he
    received (except with respect to the sum of $10,000 stated to be repayable to
    the corporate respondent). He concedes that he intended to repay to the joint
    line of credit, what he had borrowed, in the amounts reflected in the
    documents. At issue is whether the repayment obligations have matured, whether
    there is any defence to any of the promises to pay, and whether summary
    judgment should have been refused on the basis that there are other financial
    issues outstanding between the parties in their matrimonial proceedings.

[5]

For the reasons that follow, the appeal is dismissed.

[6]

First, we agree with the conclusion of the motion judge that each of the
    repayment obligations has matured.

[7]

By written agreement dated July 27, 2012, Mr. Elkind agreed to repay the
    sum of $65,000 on the earliest of certain specified events, including written demand.
    The commencement of these proceedings constituted a written demand, such that
    payment is due. A promissory note dated August 5, 2009 required payment of
    $10,000 plus interest to the corporate respondent by April 1, 2010; repayment was
    extended by the parties to April 1, 2013 by a handwritten, signed and witnessed
    addendum. Both of these payment obligations have matured.

[8]

A document entitled Loans Made to Manny Elkind and 1671379 Ontario Inc.
    from 56A Oriole Road (Lynda Friendly) and dated July 26, 2010 references three
    loans between June 2008 and July 2010 for a total of $52,208.98, as well as the
    August 2009 note in favour of the corporate respondent, for $10,000. The
    document states: All of these funds are to be paid back to Lynda Friendly from
    funds that come from the sale of 583 Welland Avenue, St. Catharines in first
    position, whether paid by Manny Elkind or 1671379 Ontario Inc.

[9]

In December 2012, 167 entered into an agreement for the sale of 583
    Welland Avenue, St. Catharines and received an initial deposit of $500,000, of
    which $250,000 was to be paid to 167, to be used for its own purposes. The appellant
    contends that, because the sale of 583 Welland Avenue, St. Catharines was
    conditional upon the completion and delivery of fully serviced lots, which had
    not yet occurred, there is no obligation to repay the amounts referenced in the
    July 2010 document.

[10]

The
    motion judges conclusion that the repayment obligation had matured was based
    on the uncontradicted evidence that the sale, although conditional, had
    generated funds in the form of the deposit. We agree with the motion judges conclusion
    that the document provided for an unconditional promise to pay at a
    determinable time. As soon as funds were received from the sale, the payment
    obligation was triggered; this intention was apparent from the provision that
    the respondent was to be in first position.

[11]

The
    fact that there was a subsequent court order directing the payment of the funds
    to various purposes did not affect the maturity of the payment obligation. The
    motion judge was satisfied that the appellant had access to some of the
    proceeds, and she noted that he had used the deposit on the sale of the
    property in part to repay his own shareholder loans. We see no error in her
    conclusion with respect to the July 2010 loan document.

[12]

Between
    September 2010 and March 2011, Mr. Elkind made withdrawals totalling $78,330 from
    the joint account and signed four documents in which he agreed to repay the
    monies referred to in the notes along with other funds he had withdrawn from
    the joint line of credit when the funds [were] available from [him] or [his]
    estate, upon [his] death. The motion judge rejected the appellants contention
    that it was up to him to decide whether he had funds available or whether to postpone
    the payment until after his death. She concluded that funds had become available
    to the appellant, and that the loans were therefore payable.

[13]

The
    appellant argues that there were in fact no funds available in part as a
    result of the various orders obtained by Ms. Friendly in the litigation, which
    have restricted the ability of 167 to make payments, except in the ordinary
    course of business. He contends that at least there was contradictory evidence
    on the issue and that summary judgment ought not to have been granted.

[14]

There
    was clearly evidence of funds being available to the appellant when 167
    received the deposit on the conditional sale of the St. Catharines property,
    and as a result of the management fee he negotiated when he increased 167s
    mortgage. In an endorsement of August 20, 2013, among other things, enjoining
    167s ability to make further payments, mortgage draws or commitments without
    further order of the court or Ms. Friendlys consent, Paisley J. concluded that
    the appellant had received repayment of shareholder loans, payment of personal
    legal fees and mortgage commitment fees, all in breach of an earlier order that
    any payments be approved by Ms. Friendly. This was a prior finding of the court
    with respect to funds that had been available to the appellant. Accordingly,
    the payment obligations of the appellant under the four documents he signed
    between September 2010 and March 2011 had matured.

[15]

The
    motion judge also rejected, on the evidence, the appellants contention that he
    was vulnerable and had been taken advantage of by Ms. Friendly. This was a bald
    allegation unsupported by any evidence. The appellant had legal counsel or
    access to counsel throughout. In any event he had been refused leave to amend
    his answer to plead unconscionability.

[16]

The
    appellant argues on appeal that he has a claim for set-off with respect to the
    amounts secured by the promissory notes, and that any liability on the
    promissory notes is inextricably bound up with his claims in the matrimonial
    proceedings. There is no right to set-off as a matter of law or fact. At best,
    the appellant has a claim in the matrimonial proceedings that he has yet to establish,
    that he made a contribution toward the matrimonial home for which he should
    receive credit under the parties marriage contract. This claim, like Ms.
    Friendlys claim for payment of her share of the value of 1671379 Ontario Inc.,
    remains outstanding, and is not affected by the requirement that the appellant
    repay his obligations to the joint line of credit.

[17]

The
    appellant conceded his obligation to repay funds that were taken from the parties
    joint line of credit. He signed promissory notes and other documents confirming
    his intention to repay the amounts. The terms of repayment were clear from the
    documents, and the appellant established no triable issue in defence to his
    repayment obligations. Accordingly, summary judgment was properly granted and
    the appeal to this court is dismissed.

[18]

As
    the appellant acknowledges, his motion for leave to appeal costs depends on his
    success in the appeal. As the appeal has been dismissed, leave to appeal costs
    is denied.

[19]

Accordingly,
    the appeal is dismissed, with costs to the respondents fixed in the amount of $10,000
    inclusive of disbursements and HST.

E.E. Gillese J.A.

K.
    van Rensburg J.A.

C.W.
    Hourigan J.A.


