Gurpartap Singh Kals - v. -, 2019 SKPC 25

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2019 SKPC 25 Date: April 10, 2019 File: SC#390 of 2017 Location: Saskatoon _____________________________________________________________________________ Between: Gurpartap Singh Kals - and - Kuldip Dhillon and Gurdip Dhillon Mr. G. Kals For the Plaintiff Mr. G. Dhillon For the Defendants ______________________________________________________________________________ JUDGMENT D.C.

SCOTT, J ______________________________________________________________________________ Introduction [ 1 ] The plaintiff Gurpartap Singh Kals has brought a claim against the defendants Kuldip Dhillon and Gurdip Dhillon for the balance owing on a $12,000.00 loan he alleges he made to the defendants to assist them in their purchase of a house. [ 2 ] The Dhillons acknowledge that Mr. Kals transferred $12,000.00 to their bank account on September 20, 2016, but deny that the funds were a loan. Rather, they assert that the money was a gift. They rely on a TD Canada Trust “Gift Letter” signed by Mr.

Kals on September 29, 2016, purporting to give the defendant Kuldip Dhillon $12,000.00 in relation to the Dhillons’ purchase of 3214 – 37 th Street, Saskatoon.

[ 3 ] Mr. Kals denies that the payment of $12,000.00 was a gift and states he was misled as to the true nature of the “Gift Letter”. [ 4 ] The Dhillons have brought a counterclaim against Mr. Kals for repayment of $6,000.00 they allege they loaned to him. Mr. Kals acknowledges that the Dhillons transferred $6,000.00 to his bank account on November 17, 2016, but states that the funds represent partial repayment of the loan he had previously made to them. [ 5 ] This Court must determine the true nature of the respective payments.

Background [ 6 ] Gurpartap Kals testified that he met the defendants in 2016 through a political organization and became close friends with the defendant Gurdip Dhillon. According to Mr. Kals, in June 2016 Mr. Dhillon told Mr. Kals he wished to purchase a home and needed to demonstrate to the Bank that he had $20,000.00 for the down payment. Mr. Dhillon began pressuring Mr. Kals for a loan after Mr. Kals mentioned that he had a line of credit. Mr. Kals decided to loan the Dhillons the amount of $12,000.00 to assist them in acquiring mortgage approval. Mr. Kals agreed to do so on the understanding that Mr.

Dhillon would repay the loan in one month, along with interest at the rate of ten per cent per month on any remaining balance. According to Mr. Kals, Mr. Dhillon agreed to repayment within one month, after being paid from his work. None of the terms of the alleged loan agreement were reduced to writing. [ 7 ] On September 20, 2016, Mr. Kals transferred $12,000.00 to the account of “Dhillon G K” by TD Canada Trust bank debit memo (Exhibit P1). [ 8 ] According to Mr. Kals, on the morning of September 29, 2016, Mr. Dhillon called him at work, urgently asking Mr.

Kals to meet them at the TD Bank to sign a document, because the Bank wanted to know how they had acquired $12,000.00. Mr. Kals testified that he hurried to the Bank during a 15-minute break and met the Dhillons at the counter. They asked him to sign a document so the Bank could verify that Mr. Kals had loaned them the money before approving their mortgage. [ 9 ] The document Mr. Kals signed was a “Gift Letter” (Exhibit P2). Mr. Kals testified that he did not take time to read the letter but Mr. Dhillon told him that the letter was a formality for the Bank so they would know the funds came from a genuine source.

Mr. Kals did not speak with anyone from the Bank in this regard. [ 10 ] According to the language of the “Gift Letter”, Gurpartap Kals purported to make a gift of $12,000.00 to Kuldip Kaur Dhillon for the purchase of property at 3214 – 37 th Street, Saskatoon. The document states, in part: “No part of the gift is being provided by any Third Party having any interest (direct or indirect) in the sale of the subject property. The money is a genuine gift and does not have to be repaid.” [ 11 ] Mr. Kals acknowledged that in the Gift Letter, he is referred to as Ms.

Dhillon’s brother even though that is not the case and he is in no way related to the Dhillons. At the time, he believed that because of Bank rules he could not assist the defendants in securing a mortgage unless he was a blood relative. According to Mr. Kals, he wrote his address and the word “Brother” on the document. Gurdip Dhillon completed the name of his wife, Kuldip Dhillon as the recipient of the funds, and their address. [ 12 ] Mr. Kals testified that in October 2016, he pressed Mr. Dhillon for repayment of the loan but the defendant told him he needed more time. On November 17, 2016, Mr.

Dhillon transferred $6,000.00 to Mr. Kals’ account, as verified by Exhibits P3 and D7, showing a debit memo transfer from “Dhillon G K” and a credit transfer to “G Kals” for that amount. No further payments were made by the Dhillons to Mr. Kals. [ 13 ] Gurdip Dhillon denied the $12,000.00 payment from Mr. Kals was a loan, which he agreed to repay with interest within one month. Further, Mr. Dhillon denied that the payment of $6,000.00 was a partial repayment of the $12,000.00 transferred to them by Mr. Kals. [ 14 ] In support of the defendants’ counterclaim, Mr. Dhillon testified that on November 16, 2016, Mr.

Kals called from India advising that Mr. Kals’ mother was sick and he required financial help. Mr. Dhillon agreed to loan Mr. Kals 300,000 rupees or

$6,000.00. According to Mr. Dhillon, no terms or conditions were agreed upon, other than Mr. Kals would repay Mr. Dhillon when he returned to Canada and when he had the funds. No terms of the alleged loan were reduced to writing. [ 15 ] The Dhillons alleged that the payment of $6,000.00 to the plaintiff on November 17, 2016 was a loan, which remains unpaid. Mr. Kals denied that he asked the Dhillons to loan money to him at any time. Issues 1. Was the payment of $12,000.00 from the plaintiff to the defendants a gift or loan? 2. Does the doctrine of non est factum apply to the signing of the Gift Letter? 3.

Was the payment of $6,000.00 from the defendants to the plaintiff a loan? Discussion [ 16 ] Much of this case hinges on the credibility of Mr. Kals and Mr. Dhillon. The defendant Kuldip Dhillon chose not to testify, even though she was present at the trial. [ 17 ] Mr. Dhillon testified that the $12,000.00 transferred to his wife, Kuldip Dhillon, on September 20, 2016 was a gift and not a loan.

He denied that the funds were to assist in the purchase of a house, stating that he had already purchased 3214 – 37 th Street West, Saskatoon by September 20, 2016, although the closing date for the purchase was November 4, 2016. Mr. Dhillon testified he had his own funds for the purchase and did not need assistance. He denied that TD Canada Trust required the Gift Letter to assist him in qualifying for a mortgage to purchase his property. I do not find Mr. Dhillon’s testimony in this regard to be credible. The payment coincided with the timing of the Dhillon’s home purchase.

More importantly, the Gift Letter states “Property To Be Purchased: 3214 – 37 th Street, Saskatoon”, which is the address of the home the Dhillons purchased. It is clear the Bank required the Gift Letter to ensure the entire purchase price was not borrowed. [ 18 ] Akshay Sharma, Mr. Kals’ co-worker, testified that he was present at a social function on July 9, 2016, when he heard Mr. Dhillon ask Mr. Kals to use his line of credit so that Mr. Dhillon could arrange mortgage approval. He heard Mr. Kals agree to help Mr. Dhillon. Mr.

Sharma did not hear the parties mention the amount or whether the payment would be a gift or a loan. At trial, Mr. Dhillon adamantly denied knowing Mr. Sharma or ever having been with him until he was confronted with photographs (Exhibit P6) of Mr. Dhillon, Mr. Kals, and Mr. Sharma as part of a small group at a dinner on July 9, 2016. [ 19 ] When asked why he thought Mr. Kals would have chosen to gift them a large sum of money, Mr. Dhillon stated they were close friends and Kuldip Dhillon was “like a sister” to Mr. Kals. However, Mr. Dhillon testified that he had met Mr.

Kals in April of 2016, which was only a few months prior. According to Mr. Dhillon, when Mr. Kals learned that the Dhillons were purchasing a house, he told them he wanted to do something nice to acknowledge the purchase of their home. As Mr. Kals pointed out, had he wished to do so, he would have sent flowers! [ 20 ] Contrary to Mr. Dhillon’s assertions, the only reasonable inference that can be drawn from the evidence is that the Dhillons applied for a mortgage to purchase their home and they required the assistance of Mr. Kals for additional funds.

The question is whether that assistance was by way of a loan or a gift. [ 21 ] The defendants rely on the language in the Gift Letter as evidence that the funds were a gift. As mentioned, the document states, “This is to confirm that the undersigned is making a gift of $12,000.” It goes on, “No part of the gift is being provided by any Third Party having any interest (direct or indirect) in the sale of the subject property. The money is a genuine gift and does not have to be repaid.” [ 22 ] According to Mr. Kals, Mr.

Dhillon told him that the purpose of the document was to provide verification to the Bank of the source of the $12,000.00. Mr. Kals testified that he was rushed by the Dhillons and did not read through the document before signing. [ 23 ] Mr. Dhillon denied Mr. Kals’ testimony regarding the circumstances surrounding the signing of the Gift Letter. Mr. Dhillon testified that Mr. Kals contacted him by telephone on September 28, 2016 and asked the Dhillons to meet him at the Bank so that he could sign the Gift Letter as proof that he had given them a gift. Mr. Dhillon explained that Mr.

Kals did so to protect both himself and the Dhillons. If the payment was nothing more than a gift, there would be no need to protect their respective interests. It is nonsensical

that Mr. Kals would have asked the Dhillons to attend at the Bank to sign a letter as evidence if his intention was simply to gift them themoney. [24] Mr. Dhillon filed log sheets and payroll records related to his work as a truck driver (Exhibits D4 and D5) to show he workeda full day on September 29, 2016. The records do not assist Mr. Dhillon, as he did not dispute that the Gift Letter was signed at the Bankin his presence on that day. [25] I find that the Dhillons contacted Mr. Kals to attend at the Bank to sign the letter. Mr.

Kals’ testimony in this regard issupported by the Gift Letter facsimile date and time as well as Mr. Kals’ telephone records (Exhibit P5). From this evidence, I infer thatthe Dhillons were already in possession of the Gift Letter by 10:15 a.m. on September 29, 2016 and that they contacted Mr. Kals to meetthem at the Bank to sign the document some time after 11:00 a.m. [26] Mr. Kals’ testimony raises the question whether the principle of non est factum applies in this case.

The doctrine is explainedby Justice Smith in Duplessis v Wilson, 2014 SKQB 207, 449 Sask R 309 [Duplessis]: [55] Non est factum may be pled as a defense by a signatory where that person was induced to sign a written document by another partywho misrepresented the nature of that document. The doctrine is summarized by John D.

McCamus in The Law of Contracts, 2d ed.(Toronto: Irwin Law, 2012) at p. 548: Where the signature has been induced by a fraudulent representation as to the nature of the document, the signatory may defend anaction brought to enforce any undertaking given in the document on the basis that the signing was not a consensual act. The defendantcan plead non est factum, that is, that the signature was not his act or, as is sometimes said in the cases, his mind did not go with thesignature.

It is as if the document were a forgery. [27] According to Justice Dawson in London Guarantee Insurance Co. v Naber Seed & Grain Co., 2003 SKQB 264: [14] A plea of non est factum is a denial of the execution of an instrument sued on. The doctrine of non est factum applies where a partymakes a unilateral mistake about a document bearing its signature. Unless the document was obtained by fraud or misrepresentation, theparty asserting non est factum must, on a balance of probabilities, show its lack of carelessness in signing the document (Bank ofMontreal v. McIntosh, (SK KB), [1995] 10 WWR 726 (Sask.

Q.B.)). . . . [20] . . .If there was misrepresentation, whether or not the Defendants were careless in signing the agreement becomes irrelevant (Bankof Montreal v. McIntosh supra, Edelweiss Credit Union v. Beck, [1991] B.C.J. No. 3183 (B.C.S.C.), Royal Bank v. Fazakas (1994), (SK KB), 118 Sask. R. 120 (Sask. Q.B.); (SK CA), 1995, 128 Sask. R. 318 (Sask. C.A.)). Carelessness will not constitute a bar if the signature on the document was obtained by fraud or misrepresentation. In Bank of NovaScotia v. Elfenbaum (1986), (SK KB), 54 Sask. R. 274 (Sask.

Q.B.), the court held…[i]f the defendant was genuinelymistaken as to the character of the document, and that mistake was contributed to or caused by some misrepresentation of the plaintiff,the defence of non est factum will prevail (Edelweiss Credit Union v. Beck, supra). [28] The doctrine of non est factum raises as a defence that a party misunderstood what they were signing and as a result, thedocument or contract should be set aside: Input Capital Corp. v Gustafson, 2018 SKQB 154.

However, as a general rule, where a partyis careless as to the nature of the document they have signed, they will not be able to rely on the defence unless they were induced tosign by misrepresentations: Marvco Color Research Ltd. v Harris, (SCC), [1982] 2 SCR 774 [Marvco]; Royal Bank ofCanada and Fazakas (1994), (SK KB), 118 Sask R 120 (Sask QB) para 25. Each case will depend upon all of itscircumstances. [29] In this case, although Mr. Kals, a self-represented individual, did not expressly plead non est factum, the essence of his claimis, in part, that he did not understand the nature of the Gift Letter.

According to Mr. Kals, he did not take the time to adequately read theletter trusting the Dhillons’ explanation that the purpose of it was to verify Mr. Kals as the source of the funds.

[ 30 ] I accept that the Dhillons imposed a sense of urgency. I find that Mr. Kals briefly attended at the Bank during his workday to sign the letter and the Dhillons were already present when he arrived. I accept that the defendants told Mr. Kals the purpose of the document was to confirm that he was the source of the $12,000.00. In so doing, I am satisfied on a balance of probabilities the Dhillons misled Mr. Kals as to the true nature of the Gift Letter and its implications. [ 31 ] Mr. Kals was careless in not reading the document before signing.

However, the Dhillons misrepresented the fundamental nature of the Gift Letter and as such, Mr. Kals was genuinely mistaken as to its character: Marvco . The letter did not reflect Mr. Kals’ intention to provide a loan, which would be repaid with interest within one month. There is no suggestion that Mr. Kals had the benefit of legal advice, but he trusted the Dhillons as his friends. I am satisfied Mr. Kals would not have signed the Gift Letter had he realized that by doing so, he was giving up his ability to enforce his loan to the Dhillons. [ 32 ] I recognize that Mr. Kals is not entirely blameless.

He untruthfully identified himself as Kuldip Dhillon’s brother, stating that in his culture, he would consider Mr. Dhillon like a brother to him and therefore Mr. Dhillon’s wife was like a sister. Mr. Dhillon’s testimony was similar on this point. I find this explanation dubious. However, at trial, Mr. Kals candidly acknowledged that the statement was false, while Mr. Dhillon did not resile from this position. [ 33 ] Whether TD Canada Trust was an innocent third party adversely affected by allowing the defence of non est factum is a factor to be considered: Duplessis para 57 .

While it is unlikely the Bank would have approved the Dhillons’ mortgage without the Gift Letter, there is no evidence the Bank would be prejudiced by allowing Mr. Kals’ defence. The Bank’s mortgage would have been secured against the Dhillons’ property and would take priority over the debt owed to Mr. Kals. Accordingly, the Bank is not disadvantaged by the Court invoking the defence of non est factum in this case. [ 34 ] The defendants cannot rely upon the Gift Letter, in light of their misrepresentations. In all of the circumstances, I accept Mr.

Kals defence of non est factum and conclude that he should not be bound by the references in the letter that the $12,000.00 was a gift. [ 35 ] In all of the circumstances, there is no air of reality to Mr. Dhillon’s assertion that Mr. Kals wished to give his wife $12,000.00, simply because they had purchased a home, which Mr. Dhillon said they could pay for without any assistance. Mr. Kals is not a wealthy benefactor, but rather a City of Saskatoon bus driver, with a wife and young child. He helps his family in India.

I accept his testimony that he had a line of credit but lived hand to mouth and carried some debt. He offered to help the Dhillons because they were trusted friends, because they had pressured him to use his line of credit and because Mr. Dhillon assured Mr. Kals they would repay the loan with interest. [ 36 ] I am satisfied on a balance of probabilities that the payment of $12,000.00 by Mr. Kals to the Dhillons on September 20, 2016 was intended by both parties to be a loan and not a gift. I accept that Mr. Kals did not intend that the $12,000.00 to be a gift, given his financial situation.

Rather, regardless of what is stated on the Gift Letter, I am satisfied that he would not have provided $12,000.00 to the Dhillons unless the funds were going to be repaid within a short period of time and he would have made that clear to Mr. Dhillon. [ 37 ] I now turn to the Dhillons’ counterclaim. As stated, they allege that on November 16, 2016, Mr. Kals contacted them from India asking for a loan. Mr. Dhillon testified that on November 17, 2016, he transferred $6,000.00 to Mr. Kals’ account. Mr. Kals denied that he had asked the Dhillons for a loan at any time. [ 38 ] There is an inconsistency in Mr.

Dhillon’s assertion that Mr. Kals would gift them $12,000.00 in September and two months later ask Mr. Dhillon for a loan. If Mr. Kals had access to substantial sums of money such that he could provide them with a gift of $12,000.00, it is unlikely he would have had to ask them for a loan. [ 39 ] I accept that the Dhillons transferred $6,000.00 to Mr. Kals on November 17, 2016. However, there is no evidence, other than Mr. Dhillon’s assertion, to suggest that the payment represented a loan. If Mr. Kals contacted Mr.

Dhillon about money, it is more likely that he did so to request or demand repayment of the loan he had provided to the Dhillons. I note the payment was equivalent to exactly one-half of the amount owing to Mr. Kals. [ 40 ] As previously stated, much of this case depends upon the credibility of the parties. Mr. Dhillon filed certain exhibits to challenge Mr. Kals’ credibility. For example, Mr. Dhillon filed the listing of the sale of his home in Brampton (Exhibit D1) to show that Mr. Kals was not truthful when he testified that Mr. Dhillon had not owned a home since arriving in Canada 20 years ago. Mr.

Kals did not purport to know for certain whether that was the case, only that this is what Mr. Dhillon told him.

[ 41 ] I found Mr. Dhillon’s testimony to be inconsistent, incredulous and at times untruthful. Mr. Kals’ testimony was straightforward, candid and corroborated. [ 42 ] It is more likely, in all of the circumstances, that the payment of $6,000.00 by the Dhillons to Mr. Kals was a partial repayment of the amount owed to Mr. Kals. Conclusion [ 43 ] In conclusion, I have found on a balance of probabilities that Mr. Kals loaned to Kuldip Dhillon and Gurdip Dhillon the sum of $12,000.00. I have found that the Dhillons repaid $6,000.00 leaving the balance owing of $6,000.00.

I therefore grant judgment in favour of Gurpartap Singh Kals against Kuldip Dhillon and Gurdip Dhillon in the amount of $6,000.00. [ 44 ] The plaintiff has also claimed interest on the loan. He alleged that he and Mr. Dhillon agreed the loan would be repaid within one month and that interest would be paid at the rate of ten percent per month. Because the agreement was not reduced to writing, and because of the excessive rate of interest claimed, I decline to award interest on that basis.

However, I award pre-judgment interest from March 24, 2017, the date of the plaintiff’s demand letter to the defendants. [ 45 ] I am not satisfied, on a balance of probabilities, that the Dhillons loaned $6,000.00 to Mr. Kals. I therefore dismiss the Dhillons’ counterclaim against Mr. Kals. [ 46 ] Taking into account all of the circumstances, including that Mr. Dhillon was clearly untruthful in important aspects of his testimony, I award costs of $600.00, pursuant to s. 36(3)(

e) of The Small Claims Act, 2016 , SS, c S-50.12 and s. 6(3) of The Small Claims Regulations, 2017, c S-50.12, Reg 1. ________________________________ D.C. Scott J