Yang v. Daluro and Gallant Date:, 2017 BCPC 189

Citation: Yang v. Daluro and Gallant Date: 20170616 2017 BCPC 189 File No: S79114 Registry: Surrey IN THE PROVINCIAL COURT OF BRITISH COLUMBIA Small Claims BETWEEN: DANILO BERZAMIN YANG CLAIMANT AND: CORAZON DALURO AND BENILDA GALLANT DEFENDANTS REASONS FOR JUDGMENT OF HONOURABLE JUDGE K.J. FERRISS Appearing on their own behalf: D. Yang Appearing on their own behalf: B. Gallant, C. Daluro Place of Hearing: Surrey , B.C.

Date of Hearing: April 25, 2017 Date of Judgment: June 16, 2017 [ 1 ] The Claimant, Danilo Yang, is suing the Defendants, Corazon Daluro and Benilda Gallant for monies he says are owed to him from a loan made to the Defendants for an investment scheme. The total of the claim is for $19,700. He is also claiming 5% per month interest and future payments for a total of $21,040. He relies on a cheque signed by both Defendants in the sum of $19,700. [ 2 ] Ms. Daluro says that she does not owe Mr. Yang the money. She says that, although he gave her the money, she was only helping to transfer the money from Mr.

Yang to a woman named Daisy Fernandez through Ms. Gallant. She says she had been introduced to Ms. Fernandez by Ms. Gallant just before she took the money from Mr. Yang, but she trusted Ms. Gallant and Ms. Gallant trusted Ms. Fernandez. [ 3 ] Ms. Gallant says that she was not involved in the investment scheme and only helped out Ms. Daluro to transfer the money from Ms. Daluro to Ms. Fernandez. She says she does not owe Mr. Yang any of the money. She says that Mr. Yang said that he was working with Ms. Daluro in a partnership. [ 4 ] Neither Ms. Gallant nor Ms. Daluro added Ms. Fernandez as a party.

Issues [ 5 ] The real issues in this matter are as follows: 1. Was the money lent by Mr. Yang to either of the Defendants as a loan or was there a partnership between any of the parties? 2. What effect does the cheque for $19,700 drawn on Ms. Daluro’s closed account and signed by Ms. Daluro and Ms. Gallant have on the Defendants’ liability? Mr. Yang’s Claim Against Ms. Daluro [ 6 ] The facts regarding the agreement between Ms. Daluro and Mr. Yang are not really in dispute. Mr. Yang and Ms. Daluro were friends. There is no indication that he thought Ms.

Daluro was a financial or investment advisor. [ 7 ] In 2014, Mr. Yang says he learned from Ms. Daluro that she had some connections that would allow him to invest his money on the following basis: Mr. Yang would give Ms. Daluro money and she would pass the money to Ms. Gallant who would pass the money to Ms. Fernandez. Ms. Fernandez worked for a payday loan company (“Loan Company”) and she would lend Mr. Yang’s money to people who did not qualify for loans from the Loan Company. For every $1,000 he gave Ms. Daluro, he would receive 10% per year ($100) and Ms. Daluro would also receive $100 per year. He says Ms.

Daluro told him that Ms. Gallant was insuring the payments and that she was a customs broker. [ 8 ] At the time, he was not working and so it seemed a good idea to him. Initially, he says he gave her less than $10,000, but he eventually increased the amount to a total of $54,000. He says he did not know how the money was moved around, but he trusted Ms. Daluro. He was aware that the money was being lent to borrowers who did not qualify for payday loans. The end borrowers were unknown to both Mr. Yang and the Defendants. [ 9 ] Ms.

Daluro says that she was trying to help people in the Philippines that were affected by floods. She believed that most of the borrowers were nannies from the Philippines who had sick parents needing money. She agrees with Mr. Yang’s evidence but says she was just helping him connect with Ms. Fernandez. She says the investment scheme fell apart after about three months. [ 10 ] Mr. Yang provided documentation as to Ms. Daluro’s repayments of the money: 1. An envelope marked “Cash - will given [sic] (every payday)” dated November 4, 2015. There is no dispute that the writing is Ms. Daluro’s. 2.

An envelope marked “Marylou Loan” and apparently contained cheques of $200 for May 30, June 13, June 27, July 11, July 25 and August 8. No year is set out, but there is no dispute that it contained Ms. Daluro’s cheques. 3. An envelope marked “Every End of the Month (payment) - B. Subido” and contains cheques dated August 30, 2014 in the amount of $200 and September 30, October 30, November 30, December 30, 2014 and January 30, 2015 all in the amount of $400. All of these cheques are drawn on Ms. Daluro’s Bank of Montreal account and signed by Ms. Daluro.

The one for August 30, 2014 is marked “Void - Pd.” None of them were cashed. 4. A Promise to Pay dated August 11, 2014 between Ms. Yacas and Ms. Daluro under which Ms. Yacas acknowledged borrowing $3,000 from Ms. Daluro and promised to repay it within six months. 5. Eleven post-dated cheques dated the 15 th and 30 th of each month commencing on September 15, 2014 and ending on February 15, 2015. None of the cheques are cashed. The parties agree that the payee information was not filled in by the person issuing the cheque. Both Ms. Daluro and Mr. Yang agree that Ms.

Daluro started having the borrowers write the cheque directly to Mr. Yang rather than Ms. Daluro. Ms. Daluro says that it was not her money so she did not want it in her name as she was afraid it would interfere with her pension benefits. Mr. Yang says he was told by Ms. Daluro she started having the borrowers write the cheque directly to him because Ms. Daluro did not want to have to wait for the cheque to clear her bank before giving the money to him.

6. An accounting by Ms. Daluro of a loan to Ms. Fernandez in the sum of $3,000 from Mr. Yang’s money. It is dated January 11, 2015 and that is the day that Mr. Yang says Ms. Daluro gave the accounting to him. It also indicates payments were to be made semi-monthly on the 15 th and 30 th of each month. Mr. Yang says that Ms. Daluro told him that Ms. Gallant gave the $3,000 to Ms. Fernandez. 7. Printouts of Mr. Yang’s TD Bank Statement for September 15 and October 1, 2015. It was not disputed that both transfers are from Ms. Gallant. The September 15, 2015 printout shows a transfer in the amount of $600.00.

The October 1, 2015 printout shows a transfer from “Gallant B” in the amount of $2,000.00. 8. A cheque from Ms. Daluro’s Bank of Nova Scotia account in the sum of $19,700.00 and dated November 20, 2015, along with a notice from his bank returning the cheque as the account it was written on was closed. There is no dispute that the writing on the cheque is Ms. Gallant’s or that the cheque is signed by both Ms. Daluro and Ms. Gallant. It clearly is not drawn on Ms. Gallant’s account. [ 11 ] Mr. Yang also provided a list of the loans that Ms. Fernandez gave to others.

He says he does not know any of the people on the list and only got their names because Ms. Daluro gave him their cheques made out to him. She would tell him not to deposit their cheques as she was going to replace them. He wrote payors’ names down with the amount of the cash given and the unpaid balance. He says that he has never met these people and only knows their names from the cheques. [ 12 ] Ms. Daluro says that Ms. Fernandez has filed bankruptcy and put Ms. Daluro’s name on it as a creditor, even though Ms. Fernandez does not owe her any money. It is her belief that Ms.

Fernandez did not lend out all of the money to the people she was supposed to. [ 13 ] When Mr. Yang filed the Notice of Claim on December 21, 2015, he says that Ms. Fernandez called him to say that she had received the money from the Defendants, but the end borrowers were unable to pay it back. Ms. Gallant’s Role [ 14 ] Ms. Gallant says that her only role was as a friend helping Ms. Daluro. She says she was not part of the investment scheme and only introduced Ms. Fernandez to Ms. Daluro so they could do business. She met with Ms. Daluro and Ms.

Fernandez at her home and in restaurants in Richmond to do the business transactions. She was never paid any money and she never anticipated that she would be. [ 15 ] Ms. Daluro says that all of the money was going to Ms. Fernandez. Ms. Daluro took Mr. Yang’s money in an envelope to Ms. Gallant, who took the money to Ms. Fernandez. Ms. Fernandez, in turn, gave Ms. Gallant the cheques from the borrowers made payable to Ms. Daluro and Ms. Gallant gave those cheques to Ms. Daluro. [ 16 ] However, Mr. Yang says that it was his understanding from Ms. Daluro that Ms.

Gallant was insuring the monthly payments as she worked as a custom broker and that they were partners. He admits that all transactions were between Ms. Daluro and him, except for the cheque for $19,700. No evidence was adduced that Mr. Yang ever met Ms. Gallant until August 19, 2015 when Ms. Daluro and Ms. Gallant came to his house after payments were not made. Ms. Gallant says that was the first time she met him. [ 17 ] Ms. Gallant, Ms. Fernandez and Ms. Daluro were to meet Mr. Yang on or about August 15, 2015 to discuss the lack of payments, but Ms. Fernandez did not attend. Ms. Daluro says Ms.

Fernandez and Ms. Gallant had promised to repay Mr. Yang at the rate of $1,500.00 per month with interest. Ms. Daluro says that Ms. Fernandez has now filed bankruptcy and put her name on it as a creditor, even though Ms. Fernandez does not owe her any money. [ 18 ] Ms. Gallant says that she was asked to sign the $19,700 cheque as a witness by Mr. Yang. Ms. Daluro asked her to write out the cheque because Ms. Daluro’s hands were shaking. She says that Mr. Yang knew there was not enough money to cover the cheque in the bank account. She was afraid of Mr. Yang as he was threatening her.

She only made the transfers of her own money in the amount of $2,600 after that meeting because she was disturbed by his phone calls asking why she was not paying. Court Proceedings on April 25, 2017 [ 19 ] At trial on April 25, 2017, Ms. Fernandez was not a party to these proceedings and I said I would provide a written decision. However, on April 25, 2017, Ms. Daluro filed an application at the court registry asking to have Ms. Fernandez added as a party. The application was adjourned to June 9, 2017 when I would be available to hear it. I dismissed Ms. Daluro’s application to have Ms.

Fernandez added as a party as she had been advised to do so prior to trial, and the evidence had been completed. Discussion [ 20 ] The onus is on Mr. Yang to prove his claim on a balance of probabilities. [ 21 ] It is difficult to put into legal terms what the parties’ relationships are. The parties did not reduce any agreements to writing and they trusted each other until the loan payments were not made. In addition to that, they were unrepresented. [ 22 ] Ms. Gallant testified that Mr. Yang had referred to Ms. Daluro and himself as partners, which suggests a situation where the monies paid by Mr.

Yang were not a loan. Mr. Yang says that the money he paid was in the form of a loan. [ 23 ] In Linnebank v. 0786763 B.C. Ltd. , 2016 BCSC 2220 , 2016 CarswellBC 3352, [2017] B.C.W.L.D. 289, 273 A.C.W.S. (3d) 645, the issue before the court was whether the money extended by the claimant was by way of a loan or to purchase a portion of the defendant’s business.

The court provided guidance in determining the existence of a partnership as follows: [90] To ascertain the existence of a partnership, the court is to inquire into whether the objective, documentary evidence and the surrounding facts, including what the parties actually did, are consistent with a subjective intention to carry on business in common. The court is to be pragmatic in its approach to the three essential ingredients of partnership.

Whether a partnership has been established in a particular case will depend on an analysis and weighing of the relevant factors in the context of all the surrounding circumstances:

Backman [v. R. (2001), 2001 SCC 10] at paras. 25-26. [91] Indicia of partnership may include "the contribution of money, property, effort, knowledge, skill or other assets to a commonundertaking, a joint property interest in the subject-matter of the adventure, the sharing of profits and losses, a mutual right of control ormanagement of the enterprise, the filing of income tax returns as a partnership and joint bank accounts". In addition, while notdeterminative, the fact that parties hold themselves out as partners is a relevant factor: Jacobs [v.

Yehia (2014), 2014 BCSC 845] at para.231 citing Continental Bank of Canada v. R., (SCC), [1998] 2 S.C.R. 298 (S.C.C.) at paras. 24, 36; Red Burrito [Ltd. v.Hussain (2007), 2007 BCSC 1277] at para. 28; and Surerus Construction [& Development Ltd. v. Rudiger (2000), 2000 BCSC 1746] atpara. 33. [24] The Court further defined “loan” as: [97] A loan is a form of contract which, like other contracts, requires mutual agreement about its essential terms evidenced either inwriting, orally, by conduct or by a combination of these things. The same principles of contract

interpretation described above apply to aloan contract. The essential elements of a loan usually include agreed terms for the payment of interest but a loan can consist of deliveryby one party and receipt by another of money on agreement, either express or implied, to repay the money with or without interest:Jacobs at paras. 253-254. [25] Applying those

definitions to this case, it is difficult to see how Mr. Yang and Ms. Daluro carried on business in common. Ifthis were a partnership, Mr. Yang contributed all of the money and accepted all of the risk on what appears to be a very high riskventure. Ms. Daluro contributed her contacts and some of her time to the venture. However, if their relationship were a partnership, sheaccepted little risk. Mr. Yang had no control of the enterprise as he did not know Ms.

Daluro’s connections or even to which individualshis money was being lent. [26] Subjectively, I cannot find that there was an intention on either the part of Ms. Daluro or Mr. Yang to form a partnership andneither of them testified that they had done so. When the loan payments started defaulting, Ms. Daluro would replace cheques that sheknew would be dishonoured and pay Mr. Yang with her money. Ms. Gallant also transferred money to Mr. Yang’s bank account tocover payments. [27] As Mr. Yang did not meet Ms. Gallant until August 19, 2015, there could not have been a contract between the two of them. Itwas only Ms.

Daluro who represented that Ms. Gallant was insuring the payments, but Ms. Gallant had no such agreement with Mr.Yang. [28] Therefore, the only claim Mr. Yang might have against Ms. Galant is if she and Ms. Daluro were in a legal partnership. However, I find that there is no evidence that Ms. Gallant received any profit from the investment scheme. While the situation issuspicious, I find that Mr. Yang has not proven on a balance of probabilities that she was doing more than helping Ms. Daluro to meetwith Ms. Fernandez and delivering money and cheques back and forth. Accordingly, I cannot find that Ms.

Daluro and Ms. Gallant’srelationship meets the definition of partnership set out in Linnebank. The Effect of the $19,700 Cheque [29] Mr.

Yang says that since both of the Defendants signed a cheque, he relies on s. 57 of the Bills of Exchange Act, s. 57, whichsays: 57(1) Presumption of value Every party whose signature appears on a bill is, in the absence of evidence to the contrary, deemed to have become a party thereto forvalue. 57(2) Presumed holder in due course Every holder of a bill is, in the absence of evidence to the contrary, deemed to be a holder in due course, but if, in an action on a bill, it isadmitted or proved that the acceptance, issue or subsequent negotiation of the bill is affected with fraud, duress or force and fear, orillegality, the burden of proof that he is the holder in due course is on him, unless and until he proves that, subsequent to the allegedfraud or illegality, value has in good faith been given for the bill by some other holder in due course. (My emphasis added.) Bills of Exchange Act, R.S.C. 1985, c.

B-4, s. 57 [30] With respect to Ms. Gallant, the evidence is that the cheque was not hers and therefore there is evidence to the contrary. Shesays that she was signing the cheque as a witness and that Mr. Yang knew there was not enough money in Ms. Daluro’s account to coverthe cheque. He wanted proof of the amount. Therefore, I find that she did not become a party to the agreement between Ms. Daluro andMr. Yang by virtue of signing Ms. Daluro’s cheque. Decision [31] Mr. Yang is successful in his claim against Ms.

Daluro for the sum of $17,100 which represents the amount of his claim lessthe $2,600 transferred by Ms. Gallant. His claim against Ms. Gallant is dismissed. Interest and Costs [32] As 5% per month amounts to 60% per annum and it is a criminal offence to charge that amount of interest, Mr. Yang’sapplication for payment of that interest is dismissed. He will have the agreed upon rate of interest, being 10% per annum, on the

$17,100 commencing December 1, 2015. [ 33 ] He will also have reimbursement of his filing fees and services fees totalling $186 against Ms. Daluro. The Honourable Judge K.J. Ferriss Provincial Court of British Columbia