TD Canada Trust Plaintiff Defendant by Counterclaim And: Randy Stapleton Defendant Plaintiff by counterclaim, 2021 NLSC 24

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : TD Canada Trust v. Stapleton , 2021 NLSC 24 Date : February 22, 2021 Docket : 201701G2800 Between: TD Canada Trust Plaintiff Defendant by Counterclaim And: Randy Stapleton Defendant Plaintiff by counterclaim Before: Justice Donald H. Burrage Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: January 28, 2021

Summary: TD Canada Trust sued Randy Stapleton for default on four Visa accounts. In addition to defending, Mr. Stapleton counterclaimed for amounts charged by TD Canada Trust to his business, C & E Holdings Ltd., and him personally. On application by TD Canada Trust,

summary judgment was entered pursuant to Rule 17.01 on one of the Visas, and the counterclaim was struck as an abuse of the court’s process and for failing to disclose a cause of action, contrary to Rule 14.24.

Appearances: Raymond G. Critch Appearing on behalf of the Applicant Michael H. Duffy Appearing on behalf of the Defendant Authorities Cited: CASES CONSIDERED: LeDrew v. Brake (1999), (NL CA), 176 Nfld. & P.E.I.R. 288, 1999 CarswellNfld163(C.A.)); Hryniak v. Mauldin, 2014 SCC 7; Ryan v. Dew Enterprises Ltd., 2014 NLCA 11 STATUTES CONSIDERED: Judicature Act, R.S.N.L. 1990, c. J-4 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D REASONS FOR JUDGMENT Burrage, J.: INTRODUCTION [1] There are two applications before the Court[1], both brought by the Plaintiff/Defendant by counterclaim, TD Canada Trust. The first seeks

summary judgment against the Defendant/Plaintiff by counterclaim, Randy Stapleton, pursuant to Rule 17.01 of the Rulesof the Supreme Court[2]. The second seeks to strike Mr. Stapleton’s counterclaim, pursuant to Rule 14.24. Rule 17.01 [2] Rule 17.01 provides: 17.01.

(1) Where the defendant has filed a defence or appeared on a hearing under an originating document, the plaintiff may, on theground that the defendant has no defence to a claim in the originating document or a part thereof or has no defence to such a claim or partexcept to the amount of any damages claimed, apply to the Court to enter judgment against the defendant.

(2) This rule applies to every proceeding begun by statement of claim other than one which includes (

a) a claim by the plaintiff for libel, slander, malicious prosecution, false imprisonment, seduction, breach of promise ofmarriage or for specific performance; or (

b) a claim by the plaintiff if based upon an allegation of fraud. [3] The wording of Rule 17.01(1) requires that the defendant have “no defence” to the claim. Applications under this Rule engagea two-step procedure. First, the plaintiff must verify the claim by affidavit and state the belief that the defendant has no defence. Second, if this hurdle is overcome, in order to defeat the application, the defendant must by way of affidavit disclose facts which, ifproven, would constitute a defence (LeDrew v.

Brake (1999), (NL CA), 176 Nfld. & P.E.I.R. 288, 1999CarswellNfld163 (C.A.)). [4] In determining if the defence is a sham the applications judge is not expected to weigh the evidence, but rather to be satisfiedthat there is sufficient evidence to warrant the defence proceeding to trial (LeDrew, at para. 9). [5] In Hryniak v. Mauldin, 2014 SCC 7 the Court addressed the ability of the

summary judgment procedure to provide for a fairand just adjudication, in a circumstance where the process allows the judge to make necessary findings of fact, apply the law to thosefacts, and is a proportionate, more expeditious and less expensive means to achieve a just result, without resort to a trial (at para. 4).

Summary judgment rules must be interpreted broadly (at paras. 5, 31).

[ 6 ] TD Canada Trust is suing Mr. Stapleton for monies allegedly owed on four credit cards. For ease of reference, I shall refer to these as they appear in the Amended Statement of Claim, as Visa #’s 1-4. In the Amended Statement of Claim TD Canada Trust alleges that: • Visa #1 is a personal Visa issued on 9 March 1994 at an interest rate of 24.99% per annum. Mr. Stapleton has been delinquent in making payments since 5 April 2016, and the amount owing as of 2 May 2019 is $68,224.93. • Visa #2 is a personal Visa issued on 9 November 2001 at an interest rate of 19.99% per annum. Mr.

Stapleton has been delinquent in making payments since 16 December 2016 and the amount owing as of 2 May 2019 is $46,911.43. • Visa # 3 is a personal US Visa issued on 15 May 2012 at an interest rate of 24.99% per annum. Mr. Stapleton has been delinquent in making payment on this account since 19 January 2017 and the amount owing as of 2 May 2019 is $11,668.16. • Visa #4 is a personal FC Travel Visa issued on 15 May 2012 at an interest rate of 24.99% per annum. Mr.

Stapleton has been delinquent in making payments on this account since 19 January 2017 and the amount owing as of 2 May 2019 is $15,759.01 [ 7 ] In response, the Amended Defence of Mr.

Stapleton amounts to a blanket denial; (at para. 3) “[the Defendant] denies all other allegations as set out in the Amended Statement of Claim and puts the Plaintiff (TD Canada Trust) to the strictest proof thereof … .” The Amended Defence also includes an Amended Counterclaim (the subject of TD Canada Trust’s application to strike), which references various loan agreements between TD Canada Trust and a company, Controls and Equipment Ltd. (C & E), of which Mr. Stapleton is the president and director.

I will have more to say about the Amended Counterclaim when addressing the application to strike, but with regard to the Visa claim it reads (at para. 7): 7. Along with the loans extended, Stapleton held Visa credit lines with TD, some in his personal name and others in the name of Controls and Equipment; however the Amended Statement of Claim refers to Visa numbers that Stapleton does not recognize as his. Stapleton denies this and puts the Plaintiff/Defendant by Counterclaim to the strict proof thereof. [ 8 ] TD Canada Trust’s application for

Summary Judgment is essentially a repeat of the averments in the Amended Statement of Claim, with a recalculation of the amounts now allegedly owed under Visa #’s 1-4, as of 30 June 2020. The application is supported by an affidavit, dated 23 September 2020, from Dwight Tomlinson of Markham, Ontario, an Unsecured Credit Officer with the bank. [ 9 ] Appended to the affidavit as Exhibits A-D are what Mr. Tomlinson describes as true copies of a Visa statement issued to Mr. Stapleton for each of Visa #’s 1-4. The statements with respect to Visa #’s 1, 2 and 4 are addressed to Mr.

Stapleton at his home address in Conception Bay, NL, while the statement with respect to Visa # 3 (the US Visa) is addressed to Mr. Stapleton in Kissimmee, Florida, US. [ 10 ] The statement with respect to Visa #1 (Exhibit

A) is for the period 9 September to 11 October 2016 and shows a balance owing as of 11 October 2016 of $35,351.21 and annual interest rate of 24.99% on purchases. [3] [ 11 ] The statement with respect to Visa #2 (Exhibit

B) is for the period 17 January to 15 February 2017 and shows a balance owing as of 15 February 2017 of $32,174.77 and an annual interest rate of 19.99% on purchases. [ 12 ] The statement with respect to Visa #3 (Exhibit

C) is for the period 28 June to 27 July 2017 and shows a balance owing as of 27 July 2017 of $8,228.23 in US dollars, and an interest rate of 24.99% on purchases. [ 13 ] The statement with respect to Visa #4 (Exhibit

D) is for the period 13 June 2017 to 11 July 2017 and shows a balance owing as of 11 July 2017 of $10,978.68 and an interest rate of 24.99% on purchases. [ 14 ] Also appended to Mr. Tomlinson's affidavit as Appendix E is what he describes as a “true copy” of the TD Cardholder Agreement provided to Mr. Stapleton in 1994 and again in 2001 “when he first received Visa #1 and Visa #2 from TD Canada Trust.” According to Mr. Tomlinson this TD Cardholder Agreement also governs Visa #4, although he does not say whether or not it was ever provided to Mr. Stapleton. [ 15 ] Finally, appended to Mr.

Tomlinson's affidavit as Appendix F is what he describes as a “true copy” of the TD Cardholder Agreement provided to Mr. Stapleton with regard to Visa #3. [ 16 ] Mr. Tomlinson concludes his affidavit by calculating the amounts owing as of 30 June 2020, based on the final statement dates and applicable interest rates for each Visa, as follows: Visa #1 ($35,351.21 at 24.99% per annum) = $80,373.45 Visa #2 ($32,174.77 at 19.99% per annum) = $55,169.86 Visa #3 (USD $8,228.23 at 24.99% per annum) = USD $14,104.36 Visa #4 ($10,978.68 at 24.99% per annum) = $19,072.56 [ 17 ] Mr.

Stapleton provided an affidavit, dated 24 November 2020, in response to the application. In it he states that he is the Director of C & E, a company carrying on business in the HVAC industry. He acknowledges having a personal banking and business banking relationship with TD Canada Trust “for many years”, during which he maintains there was a co-mingling of the credit cards issued between 1994 - 2012. He thus questions whether the outstanding Visas are for his personal account, or the account of C & E. As a result, Mr.

Stapleton writes “I require more evidence from TD to substantiate these alleged debts” (at para. 5). [ 18 ] With respect to Visa #2 Mr. Stapleton deposes not only that the card was for his business and not him personally, but that it has been paid in full. He maintains that the issuance of this Visa for the business is corroborated by a photograph of a Visa card bearing the

names “Controls & Equip LT” and “Randy J. Stapleton.” [ 19 ] It will be recalled that according to Mr. Tomlinson, Exhibit E is a true copy of the TD Cardholder Agreement provided to Mr. Stapleton governing, inter alia , Visa #2. [ 20 ] The TD Cardholder Agreement provided by Mr. Tomlinson is a blank form entitled “TD Business Credit Card Agreement - Business Borrower Liability (non-standard form)” (the “Agreement”) [4] . It provides for the issuance of a Visa business card to “Business Borrowers”, as identified in the Agreement. In

Section 1 of the Agreement such borrowers are defined as a “legal entity (company, corporation, partnership etc.).” Business Borrowers, as identified, are deemed to be jointly and severally liable for all debts incurred on the account. The Agreement also provides for the issuance of a Visa card to individual “Cardholders”, who agree to be bound by the terms of the “Cardholder Agreement”, as attached. [ 21 ] Not only is the Agreement provided by Mr. Tomlinson in blank form, but there is no “Cardholder Agreement”, attached. The omission is not insignificant, for subsections 1(

c) and (

d) of the Agreement read: (

c) you will be jointly and severally liable for all obligations including payment of all amounts owing to us under the Cardholder Agreement for all Card(

s) issued to the Cardholder(s) (

d) the paragraph in the Cardholder Agreement under the heading “Liability” providing for joint and several liability does not apply; you the Business Borrowers are each jointly and severally liable for payment of all amounts owing to us under the Cardholder Agreement; the Cardholder(

s) are not liable to us for repayment under the Cardholder Agreement. [ 22 ] In the Agreement “you” is defined as “each of the Business Borrowers.” [ 23 ]

Section 2 of the Agreement provides for the issuance of a Visa card to the Cardholders, and provides for the Cardholder(

s) name, date of birth, phone number, address, card type and credit limit. In the preface to the space provided for this information (which is blank on the form provided)

section 2 reads, in part: The Business Borrowers are each liable for all amounts charged to the TD Credit Card Account, including those made by any Cardholder(s). [ 24 ] Insofar as the Agreement as provided is in blank form, the question thus arises as to whether it was completed by Mr. Stapleton and, if so, as a Business Borrower, or a Cardholder, or both. The Visa card as provided by Mr. Stapleton bears both his name and that of his company C & E. However, no evidence was led by TD Canada Trust with regard to its practice in the issuance of cards. [ 25 ] The fact that the monthly Visa statement was sent to Mr. Stapleton at his home address is of no assistance. Subsection 1(

b) of the Agreement provides that TD Canada Trust may send monthly statements and other communication to either the Business Borrower(

s) or the Cardholder(s). [ 26 ] Based on the foregoing evidence I am unable to conclude, with the required degree of confidence for the entry of

summary judgment, that the amount owing to TD Canada for Visa #2 is owed personally by Mr. Stapleton. I say this based on the following: • The deposition by Mr. Stapleton that Visa #2 was a business Visa in the name of his company for which he is not personally liable; • Mr. Stapleton’s deposition that Visa #2 was paid in full through a restructuring of C & E; • Visa #2, as issued, is in both the company name, C & E, as well as Mr. Stapleton; • The deposition of Mr. Tomlinson that the TD Business Credit Card Agreement (Appendix

E) was the form of Agreement provided to Mr. Stapleton at the time Visa #2 was issued; • The Agreement as provided is blank and without the referenced Cardholder Agreement; • On its face the Agreement provides that Cardholders are not liable for the debt of the Business Borrowers; and • There is no evidence before me as to whether Mr. Stapleton completed the Agreement (assuming he completed it) as a Business Borrower, and/or Cardholder. [ 27 ] Turning now to TD Canada Trust’s claim with respect to Visa #1 and Visa #4. Unlike Visa #2, Mr. Stapleton does not say that these Visas have been paid in full.

However, he repeats the assertion that his personal affairs and business were co-mingled. As a result, he does not recognize the account numbers and states that he requires further proof. [ 28 ] On the other hand, we have the affidavit of Mr. Tomlinson to the effect that like Visa #2, both Visa #1 and Visa #4 were governed by the same TD Business Credit Card Agreement, attached as Exhibit E to his affidavit. If Mr. Tomlinson is correct, both Visa #1 and Visa #4 were also Business Visas. On this application for

summary judgment, TD Canada Trust’s claim therefore suffers from the same deficiencies as Visa #2. [ 29 ] This leaves Visa #3, the U.S. Dollar Visa. The Cardholder Agreement provided to Mr. Stapleton at the time this Visa was issued is attached as

Schedule F to Mr. Tomlinson’s affidavit. It does not suffer from the same deficiencies as the TD Business Credit Card Agreement. It is clearly a personal Visa, and provides that upon activation the cardholder is deemed to have read the agreement. Statements are provided to the Primary Cardholder, in this case Mr. Stapleton, at his address in Florida. The Primary Cardholder is liable for all payments under the card. [ 30 ] Attached to Mr. Tomlinson’s affidavit is a copy of the statement sent to Mr. Stapleton in Florida showing a balance owing on 27 July 2017 of $8,228.23 USD. This amount was recalculated by Mr. Tomlinson, based on the contractual interest rate of 24.99% per

annum, as USD $14,104.36 as of 30 June 2020. [ 31 ] Mr. Stapleton has offered no explanation for why this account remains unpaid and it does not suffer from the possibility of co- mingling with his business. Based on Mr. Tomlinson’s evidence, and the lack of evidence from Mr. Stapleton, I am satisfied that Mr. Stapleton has no defence to this portion of TD Canada Trust’s claim. It is therefore entitled to

Summary Judgment with respect to Visa #3 in the amount of USD $14,104.36, as of 30 June 2020, and contractual interest at 24.99% per annum thereafter. RULE 14.24 [ 32 ] Rule 14.24 provides, as follows: 14.24.

(1) The Court may at any stage of a proceeding order any pleading, affidavit or statement of facts, or anything therein, to be struck out or amended on the ground that (

a) it discloses no reasonable cause of action or defence; (

b) it is false, scandalous, frivolous or vexatious; (

c) it may prejudice, embarrass or delay the fair trial of the proceeding; or (

d) it is otherwise an abuse of the process of the Court, and may order the proceeding to be stayed or dismissed or judgment to be entered accordingly.

(2) Unless the Court otherwise orders, no evidence shall be admissible by affidavit or otherwise on an application under rule 14.24(1 )( a). [5] [ 33 ] In its second application, TD Canada Trust seeks to strike the Amended Counterclaim of Mr. Stapleton, pursuant to Rule 14.24, on the grounds that it discloses no reasonable cause of action and/or is otherwise an abuse of the Court’s processes. [ 34 ] TD Canada Trust’s argument is simple. In the Amended Counterclaim Mr.

Stapleton purports to sue TD Canada Trust based on monies allegedly owed not to him personally, but to the company, C & E, of which he is president and director. C & E, however, is not a party to TD Canada Trust’s claim against Mr. Stapleton and is thus a stranger to the within action. As such, any claim by C & E against TD Canada Trust must be brought in a separate proceeding and to bring the action as a counterclaim is an abuse of the Court’s process. Whether or not a court would subsequently order joinder of the two actions is not an issue before me. [ 35 ] In addition, TD Canada Trust submits that Mr.

Stapleton’s counterclaim is vague and does not disclose a plea of material facts necessary to establish a cause of action by him personally against TD Canada Trust. [ 36 ] A careful review of the Amended Counterclaim leads to the conclusion that both arguments have merit. [ 37 ] Counterclaims are addressed by Rule 11, the relevant parts of which read, as follows: 11.01.

(1) Where a defendant has a claim against a plaintiff in respect of any cause of action, whenever and however arising, the defendant may, instead of bringing a separate proceeding, make a counterclaim in respect of the claim. 11.02 .

(1) Unless the Court otherwise orders, where a defendant has a claim, in respect of the subject matter of the counterclaim or the original proceeding, against a plaintiff and any other person, whether or not a party, the defendant may join that person with the plaintiff as defendants to the counterclaim by (

a) adding both names to the title of the proceedings as in Form 11.02A; (

b) with respect to the plaintiff, complying with the provisions of rule 11.01(2); and (

c) with respect to the other person, by filing and personally serving the counterclaim in Form 11.02(

A) on the person within ten days from the service of the originating document in the original proceeding on the defendant, or within such further time as the Court may order.

[ 38 ] The Rule contemplates a claim by the defendant against the Plaintiff, not a claim by the defendant on behalf of a third party stranger to the action. [ 39 ] While I was not referred to a decision directly on point, in discussing the

section of the Judicature Act [6] which provides the basis for Rule 11 Chief Justice Green noted in Ryan v. Dew Enterprises Ltd. , 2014 NLCA 11 (at para.36); 36 This section, which is not directly related to the disposition of the current appeal, provides the authority for a defendant in a proceeding to counterclaim against the plaintiff in the same proceeding instead of commencing a separate action. There is nothing in this provision that restricts the ability of a counterclaiming defendant to raise issues arising out of the subject matter of the plaintiff's initial claim.

Thus, as against a plaintiff , as opposed to a subsequently- joined third party who is not also a plaintiff, a defendant can make any unrelated counterclaim (subject, of course, to the power of the court to sever such a counterclaim and order that it be tried separately, if the original claim and counterclaim cannot be conveniently tried together: Rule 40.12; Bank of Montreal v. H.O. House Ltd. (1978), 15 Nfld. & P.E.I.R. 33 (Nfld.

C.A.) ). [ 40 ] The Amended Counterclaim alleges that C & E entered into various loan agreements with TD Canada Trust in 2011 and 2013, as secured by various instruments, including a loan guarantee from Mr. Stapleton’s spouse. It is alleged that she signed this without the benefit of independent legal advice. Mr. Stapleton’s spouse is not a party to the within action, however. [ 41 ] The Amended Counterclaim proceeds to allege that various fees charged to C & E and Mr. Stapleton for the loans to C & E and were improperly deducted from the bank accounts of each.

It is further alleged that TD Canada Trust demanded repayment of its loans to C & E, and that this demand and the resulting forbearance agreement caused C & E and Mr. Stapleton to suffer a decline in credit availability and damaged their reputation among creditors. Mr. Stapleton claims that he was thereby forced into new agreements that were “unfavourable and detrimental to his business and personal life” and claims “special and punitive damages for pecuniary and non- pecuniary loss to be proven at trial.” [ 42 ] While facially in the Amended Counterclaim seeks damages for Mr.

Stapleton personally, at its core are the loans allegedly made to C & E, the fees charged for these loans, and TD Canada Trust’s subsequent demand for repayment. [ 43 ] C & E is a stranger to the claim brought by TD Canada Trust. Its claim is therefore not properly the subject of a counterclaim and must be struck. To permit it to continue would be an abuse of the court’s processes. [ 44 ] The difficulty with the Amended Counterclaim does not end there, however, for it fails to plead sufficient facts upon which to ground a cause of action by Mr. Stapleton in his personal capacity.

Indeed, it is impossible to discern with any assurance whether Mr. Stapleton is alleging a breach of contract between himself and TD Canada Trust, or some unspecified claim in tort, or both. Rather, the Amended Counterclaim makes vague references to deductions of unspecified “fees” by TD Canada Trust from the bank accounts of C & E and Mr. Stapleton and TD Canada Trust’s use of its alleged lender as a last resort position to force Mr.

Stapleton into “new agreements that were unfavourable and detrimental to his business and personal life.” No further particulars are provided with respect to these “new agreements”. [ 45 ] As written the Amended Counterclaim fails to disclose the facts necessary to ground a course of action by Mr. Stapleton personally (as opposed to C &

E) against TD Canada Trust. DISposition [ 46 ] TD Canada Trust is entitled to judgment against Mr. Stapleton on Visa #3 in the amount of USD $14,104.36 as of 30 June 2020 together with contractual interest at 24.99% per annum thereafter. [ 47 ] TD Canada Trust’s application for

Summary Judgment with respect to Visa #’s 1, 2 and 4 is dismissed. [ 48 ] TD Canada Trust’s application pursuant to Rule 14.24 is granted. The Amended Counterclaim is struck. [ 49 ] As the results are mixed, each party shall bear their own costs. _____________________________ Donald H. Burrage Justice