2011 QCCQ 4881, 2011 QCCQ 4881

Stacey c. Lombardi 2011 QCCQ 4881 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL TOWN OF MONTREAL Civil Division No: 500-22-176481-102 DATE: May 9, 2011 ______________________________________________________________________ BY THE HONOURABLE SUZANNE HANDMAN, J.C.Q. ______________________________________________________________________ SCOTT STACEY Plaintiff v.

TONY LOMBARDI Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Scott Stacey is claiming $55,250 from Tony Lombardi, alleging that Mr. Lombardi failed to repay a loan. Mr. Lombardi denies the claim, maintaining the money paid by Mr. Stacey was a deposit given to construct a service station. THE QUESTION IN LITIGATION: [ 2 ] Was the money paid by Plaintiff Scott Stacey to Defendant Tony Lombardi a loan, which should be reimbursed, or a deposit paid in the context of a business deal?

THE OBJECTIONS: [ 3 ] During Defendant's testimony, his attorney wished to question him regarding a contract concluded between his employer and a third party, the alleged receipt of $40,000 from Plaintiff and the date it was given. Plaintiff's attorney objected, claiming this was an attempt to contradict the terms of an agreement. [ 4 ] The attorney for Defendant submitted he was not attacking the terms of the contract D-1; he wished to introduce the agreement to establish the reason Defendant received funds from Plaintiff and the date they were given. [ 5 ]

Article 2863 C.C.Q. provides that the parties to a juridical act set out in writing may not contradict or vary its terms by testimony, unless there is a commencement of proof. [ 6 ] In the present case, Defendant does not intend to contradict the contract D-1; rather he wants to prove the existence of a relationship between the parties, which is not contemplated by D-1. As for the alleged date of payment, there is no contradiction of the contract; the contract sets out a payment

schedule but not the date on which payment was actually made. There is no violation of

article 2863 C.C.Q.; Defendant's testimony is admissible. THE EVIDENCE:

a) The version of Plaintiff Scott Stacey: [ 7 ] Plaintiff manages gas stations, the first of which was built in 2007 by John Reid and sons inc.. (hereinafter “John Reid”). Defendant works for John Reid. Plaintiff met Defendant during the construction of the first gas station and they developed a friendship.

[ 8 ] Initially, they met a few times a week, and on occasion had coffee together. Later, they met less often but still saw each other on a weekly basis because they did business together. [ 9 ] In April 2008, Defendant asked Plaintiff for a loan of $10,000 for the education of one of his children. It was to be repaid at the end of the month. Plaintiff paid this sum in cash. Although he was not reimbursed, Plaintiff again loaned Defendant money in May 2008; this time he provided $27,000 in cash. [ 10 ] Plaintiff did not obtain a receipt.

For Plaintiff, this was not a problem since he considered that he and Defendant were friends. [ 11 ] Plaintiff then began to ask that his loan be repaid and repeatedly asked for his money. Defendant kept saying he would repay it the following month. [ 12 ] Defendant told Plaintiff he would give him $55,000, when the business was sold, such that the loan would include interest.

The amount of interest he promised kept increasing, when Defendant was in the process of selling his company. [ 13 ] On April 15, 2009, Defendant gave Plaintiff two cheques, one dated April 16, 2009 for $17,650 and the second dated April 17, 2009 for $19,850. The notations on the bottom read “windows, kitchen” on the first cheque and “garage” on the second. Defendant completed and signed the cheques. He explained to Plaintiff, it would be easier to cash them at the bank, with these notations. [ 14 ] Plaintiff attempted to cash the cheques; he was told there were no funds in Defendant's account.

These cheques were never replaced.

b) The version of Defendant Tony Lombardi: [ 15 ] Defendant was working for John Reid and sons inc.. He met Plaintiff, a manager, when the company was building a service station and he dealt with him when John Reid built a second service station for Plaintiff. In 2007 and 2008, they met approximately twice a week. They had a business relationship.

They did not go out socially or meet outside of business; they were not friends. [ 16 ] In April 2008, Plaintiff proposed that John Reid build a service station for KNJ Service Station, whose owner was Kyle Diabo and a friend of Plaintiff. [ 17 ] After seeing the site with Plaintiff, Defendant drafted a contract on behalf of John Reid, dealing with the description of the work, the amount and the terms of payment. The contract is between John Reid and Kyle Diabo. Defendant signed the contract and gave it to Plaintiff. Plaintiff had it signed by Mr.

Diabo of K & J Service Station and brought it back to Defendant. [ 18 ] The contract provides a payment schedule; a deposit of $40,000 being payable at the time of signature, Defendant stated he received the $40,000 in December 2008 from Plaintiff and provided him with a receipt. [ 19 ] Defendant's attorney wished to question Defendant as to the commission he claimed he paid Plaintiff for finding a client.

Plaintiff's attorney objected, arguing that proof of this alleged juridical act between the parties cannot be made by testimony, since the value in dispute exceeds $1,500. [ 20 ] Given there is no commencement of proof, this evidence is not admissible. [ 21 ] After 2008, Defendant and Plaintiff still were in contact since John Reid was providing service for Plaintiff's gas station. [ 22 ] Plaintiff wanted the reimbursement of his money. He asked for it frequently, once a week or once every couple of weeks when they met as well as by telephone. Defendant contacted Mr.

Diabo who said he would remit the funds. [ 23 ] In April 2009, Defendant gave Plaintiff two cheques, totalling $37,500, one for $17,650 and the other for $19,850. Defendant admits he filled in the contents of the cheques but does not recall writing the notations written on the bottom. He was unable to explain why he had make out the cheques to the particular sums indicated rather than in round figures. [ 24 ] Defendant stated he gave Plaintiff the cheques when he learned that the money came from Plaintiff and not Mr. Diabo; as well, Mr. Diabo had said he planned to remit the $40,000 to him (Defendant).

The cheques were from Defendant's personal account and not from the account of John Reid; it was easier to pay in this manner. Defendant denied ever promising interest on the money; he also denied he had asked Plaintiff to wait until his business was sold. [ 25 ] Defendant testified that he told Plaintiff not to cash the cheques until he received the money from Mr. Diabo but Plaintiff nevertheless tried to do so. The bank called Defendant because there were no funds in his account. He spoke to Plaintiff later that day and asked why he had tried to obtain the funds when Defendant had told him to wait.

He never replaced these cheques. ANALYSIS: [ 26 ] Plaintiff contends he gave Defendant two loans totalling $37,500 and submits that the receipt of money not owed amounts to unjust enrichment. [ 27 ] Defendant claims he received money from Plaintiff as a deposit for a contract, for the construction of a service station. Defendant submits the cheques he gave Plaintiff were conditional upon Mr. Diabo paying Defendant the amount owed; if Mr. Diabo failed to pay, then there is no consideration for the cheques. [ 28 ] The parties described two completely different scenarios.

Both parties argue the version of the other is not plausible. [ 29 ] For example, Plaintiff questions the signing of a contract with an individual unknown to Defendant and the remittance of personal cheques to Mr. Stacey to repay money allegedly given for a contract with John Reid.

[ 30 ] Defendant questions Plaintiff giving Defendant loans without a receipt and points to various contradictions between Plaintiff's testimony in Court and his answers in the examination after plea. [ 31 ] While both versions are problematic, the Court prefers that of Plaintiff. [ 32 ] Plaintiff testified he gave Defendant a $10,000 loan in April 2008 and a $27,500 loan in May 2008, totalling $37,500. Both were in cash. He did not get a receipt since he considered he and Defendant were friends.

While this is unusual, such situations do take place, albeit usually for lesser amounts of money. [ 33 ] Defendant admits to receiving money from Plaintiff but he claims that it was a deposit for the contract concluded between John Reid and Son Ltd. and Mr. Kyle Diabo (K & J Service Station), paid by Plaintiff on behalf of Mr. Diabo. [ 34 ] This contract, for a total of $182,560, is made with an individual Defendant has never met and to whom he has never spoken. Defendant claims he received the requisite $40,000 deposit from Plaintiff in December 2008 and in this regard, he submits two receipts.

The receipts are not on John Reid's letterhead and have no indication that payment is made to John Reid and Son Ltd.. [ 35 ] In both receipts the reference to Plaintiff appears to be written with darker ink and after the receipts were completed, since one receipt has the added inscription: “ATT: Scott Stacey” which partially covers the line below it. The other receipt contains the inscription: “Received By Scott Stacey” . One receipt is dated December 1, but is marked received December 12th, while the other is dated December 11th and states “'Received 22/12/08” .

No explanation was given for the different dates. [ 36 ] Defendant remitted two cheques to Plaintiff for $37,500, one for $17,650 and the other for $19,850. The amounts on each are unusual but Defendant had no explanation for same. However, the total sum of the cheques corresponds to the amount of the loan Plaintiff claims he made. [ 37 ] More importantly, the cheques do not emanate from John Reid and Son Ltd. to whom the funds were allegedly destined but from Defendant's personal account.

His only explanation for writing the cheques from his personal account, rather than that of his employer, was that it was easier to pay that way. [ 38 ] The cheques emanating from Defendant constitute a commencement of proof, which renders admissible testimonial evidence as to the alleged loan made by Plaintiff. [ 39 ] Plaintiff submits that the cheques constitute a presumption of payment in execution of an obligation on the part of Defendant. Defendant claims they were written to repay Plaintiff money, when Mr.

Diabo paid the amount foreseen as a deposit, in virtue of the construction contract concluded with John Reid. [ 40 ] The Court considers that the issuance of cheques by Defendant can be assimilated with the recognition of a debt to Plaintiff and renders probable the fact that Plaintiff loaned Defendant money. [ 41 ] Defendant argues that Plaintiff was acting as a mandatory for Kyle Diabo who was to have a service station built and that Mr. Diabo had promised to give Defendant the $40,000, in order for Defendant to repay Plaintiff. If this is the case, why did Defendant not subpoena Mr.

Diabo to corroborate his version of the facts? Mr. Diabo was not called upon to testify and the Court draws a negative inference from Mr. Diabo's absence. [ 42 ] Defendant raised contradictions in Plaintiff's evidence when compared to his testimony in the examination after plea.

It is not denied there are discrepancies with respect to such aspects as to the date the second loan was made, the amount of interest payable and the date on which interest was first discussed. [ 43 ] These inconsistencies do exist but, in the view of the undersigned, are not significant, particularly in comparison with the version of Defendant, who was unable to explain the notations on the bottom of the cheques or the reason he made out the cheques for unusual amounts or why he provided personal cheques to remit money that was payable to his employer. [ 44 ] While two different versions were presented, certain facts are not disputed: [ 45 ] Plaintiff gave Defendant a sum of money in two installments; in cross-examination, Defendant admitted the amounts were $10,000 and $27,500.

Plaintiff repeatedly requested that Defendant reimburse the money he gave him. Defendant provided Plaintiff with two cheques from his personal account, the total of which comes to the same amount Plaintiff says he lent Defendant. There were insufficient funds in Defendant's account and Plaintiff was never repaid. [ 46 ] In light of the evidence, the Court concludes that the preponderant evidence is that Plaintiff lent Defendant $37,500 and is entitled to be reimbursed this sum. [ 47 ] As for interest, there is no evidence that any specific amount was established by the parties.

Given that the cheques are dated April 2009, the Court grants interest at the legal rate from the date Plaintiff attempted to cash the cheques. FOR THESE REASONS, THE COURT: GRANTS , in part, Plaintiff's action; CONDEMNS Tony Lombardi to pay Scott Stacey the sum of $37,500 plus interest at the legal rate and the additional indemnity foreseen by

section 1619 of the Civil code of Québec since April 17, 2009;

THE WHOLE , with costs. __________________________________ SUZANNE HANDMAN, J.C.Q. Me Angela Markakis BCF l.l.p. Attorneys for Plaintiff Me David Rosenzveig ROSENZVEIG STRAUBER AND WAXMAN Attorneys for Defendant Date of hearing: April 8, 2011