2014 QCCQ 3525, 2014 QCCQ 3525

Dion c. Karounis 2014 QCCQ 3525 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTRÉAL Civil Division No: 500-32-130692-116 DATE: May 1, 2014 ______________________________________________________________________ BY THE HONOURABLE DOMINIQUE VÉZINA, J.C.Q. ______________________________________________________________________ MICHEL DION Plaintiff v.

MARTHA KAROUNIS and BRIAN DWARKA Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Michel Dion sues Martha Karounis and Brian Dwarka to obtain the amount of $ 1,625.27 with respect to certain expenses associated with a loan offer cancelled by them. [ 2 ] Mrs. Karounis and Mr. Dwarka deny owing such amount and state that the loan offer was a preliminary document not binding them. QUESTIONS IN LAW [ 3 ] A. Is the loan offer document enforceable against Mr. Karounis and Mr. Dwarka? [ 4 ] B.

Under that document [1] , can Mr. Dion claim for the administrative fees of $ 1,000.00 and the title search costs of $ 625.27? CONTEXT [ 5 ] The Court summarizes as follows the relevant facts from the evidence presented. [ 6 ] Mrs. Karounis and Mr. Dwarka are the owners of a triplex which they bought from Mrs. Karounis’s mother. [ 7 ] Mrs. Karounis knows Mr. Dion from a previous business relationship with her mother for the same property. [ 8 ] Around September 11, 2011, Mrs. Karounis and Mr. Dwarka were notified of a default of payment of their property taxes.

This lead them to considering obtaining a loan. [ 9 ] Mr. Dion became aware of the notice and offered them such a loan. On September 20, 2011, the loan offer is signed but requires filing various documents and information prior to releasing the money and registering a mortgage to secure it. The transaction has to take place at a future date at the notary’s office. [ 10 ] While gathering all the relevant documents, Mrs. Karounis and Mr.

Dwarka change their minds. [ 11 ] On September 30, 2011, they cancel their request for such a loan and do not attend the meeting scheduled at the notary’s office. [ 12 ] On October 3, 2011, Mr. Dion put Mrs. Karounis and Mr. Dwarka on notice [2] to pay him for the administrative fees of $ 1,000 [3] , and the costs of $ 625.87 for the title search [4] based on the clauses of the signed loan offer. ANALYSIS

A. Is the loan offer document enforceable against Mr. Karounis and Mr. Dwarka? [ 13 ] On September 20, 2011, the proof shows that a valid contract for a loan was entered into by the parties. It is not a preliminary document leading to a formal loan only once all documents would have been provided by Mrs. Karounis and Mr. Dwarka. [ 14 ] In the contract, Mr. Dion refers to the notice of disclosure according to the Consumer Protection Act [5] ( CPA ), confirming his knowledge of such law. The loan contract is indeed regulated by the CPA. [ 15 ] Under the terms of that law, Mrs. Karounis and Mr.

Dwarka qualify as “consumers” whereas Mr. Dion meets the broad definition given to the term “merchant” [6] . [ 16 ] Contracts for the loan of money are defined as contracts of credit [7] under CPA and must be evidenced in writing [8] . [ 17 ] Strict compulsory clauses must be present to form a valid contract of credit [9] . [ 18 ] Formalities are essential under the CPA, as explained by Guy Morin [10] : L’encadrement du contrat de prêt d’argent dans la

Loi sur la protection du consommateur restreint le principe traditionnel du consensualisme contractuel. La

Loi sur la protection du consommateur exige le formalisme de l’écrit et impose un devoir de divulgation précise de l’ensemble des obligations du consommateur. [ 19 ]

Section 115 of the CPA states: 115. A contract for the loan of money must reproduce the particulars provided for in

Schedule 3, in addition to those prescribed by regulation. [ 20 ] According to the Regulation respecting the application of the Consumer Protection Act [11] and the CPA [12] , specific clauses must be included in the contracts for the loan of money referring for instance to the cancellation of the contract and to the forfeiture of benefit of the term. [ 21 ] Such specific clauses are not found in the loan offer document. [ 22 ] The absence of the required clauses void the contract [13] which is annulled. [ 23 ] The parties are then in the same position as they were before concluding the contract. B.

Under that document, can Mr. Dion claim for the administrative fees of $ 1,000.00 and the title search costs of $ 625.27? [ 24 ] In light of paragraphs 22 and 23, Mr. Dion cannot claim any reimbursement of expenses from Mrs. Karounis or Mr. Dwarka. FOR THOSE REASONS, THE COURT: DISMISSES the action of Plaintiff Michel Dion against Defendants Martha Karounis and Brian Dwarka; THE WHOLE WITH COSTS in the amount of $ 89. ________________________________ DOMINIQUE VÉZINA, J.C.Q.

Date of hearing: April 2, 2014 Borrower pays non-refundable fees of one thousand dollars (1,000.00 $) to creditor for a twelve (_12_) months or 36 months (equivalent to an interest rate of _11.1_ %) for analyzing this loan request and for administration costs of same, payable by the disbursement of the fund of the loan. And for the renewal term, the fees are payable at the time of the first payment of each renewed ‘term’ of the loan.

Borrower acknowledges having read and understood this loan offer and agrees with all its terms and conditions. Thus Borrower authorizes the Notary to proceed with title search and preparation of related documentation required for the loan and agrees to pay all fees and expenses, whether or not the loan be disbursed, and authorizes Creditor and the Notary to perceive, within the deposit of the disbursement, whatever the case may be, all amounts that are due to them.

Borrower has three (3) days from signature of this loan offer to have it validated by a professional of his choice and to cancel this offer if he so desires by communicating directly with Mtre André Dufresne, Notary, within the time allowed.