2005 BCSC 87 Walker v. Milley and Milley

Before: The Honourable Mr. Justice Blair
in Chambers

Reasons for Judgment

Counsel for the Plaintiff	J.H. Grover
Counsel for the Defendants	H.J. Harris
Date and Place of Trial/Hearing:	December 3, 2004
	Kamloops, B.C.

[1] The plaintiff, Arlene Walker, seeks judgment against the defendants, Lea Milley and Kal Milley, also known as Kalan Milley, for the sum of $30,000 plus interest at the rate of 10 percent per annum from December 10, 1997.

[2] Ms. Walker met Mr. Milley in 1995, being introduced to him by her niece, Ronda Olds, when the latter and Mr. Milley were working at a Kamloops restaurant. Mr. Milley, then pursuing studies in business administration at the University College of the Cariboo, planned to open a bagel store in Kamloops called Benny's Bagels, but needed $30,000 in order to obtain financing from a Kamloops financial institution.

[3] Ms. Walker indicated a willingness to advance $30,000 to Mr. Milley, but had some reservations about Mr. Milley's ability to repay the monies. Mr. Milley suggested Ms. Walker should contact his parents, Bruce and Lea Milley who would guarantee repayment of the monies advanced. Ms. Walker contacted Bruce Milley who said he could not guarantee the loan because of the terms of his partnership agreement, but that his wife Lea Milley would guarantee the loan upon her return to Canada. Bruce Milley, on October 19, 1995, faxed the following message to Ms. Walker:

My partnership agreement does not allow me to guarantee your loan to Kal -- however my wife will sign one when she returns from Hong Kong October 27 - (she has all the assets anyway). We will contact you on about the 30th.

[4] Ms. Walker on October 26, 1995 advanced $8,000 to Kalan Milley by way of a cheque. On October 31, 1995 Bruce Milley faxed to Ms. Walker an undated letter from Lea Milley which stated:

This letter is to confirm that I will guarantee your loan to Kal Milley in an amount not to exceed $30,000.

[5] On November 1, 1995, the day after she received Ms. Milley's letter, Ms. Walker advanced a further 22,000 by way of a debit slip issued to Kal Milley as payee.

[6] The documentation relating to the advancement of the $30,000 consists of Bruce Milley's October 19, 1995 fax to Ms. Walker, Ms. Milley's letter to Ms. Walker accompanying Bruce Milley's fax of October 31, 1995, the $8,000 cheque of October 26, 1995 payable to Kalan Milley and the November 1, 1995 debit slip advancing $22,000 to Kalan Milley.

[7] Ms. Walker and Mr. Milley, in 1995, did not document the terms of the transaction under which Ms. Walker advanced the $30,000 to Mr. Milley, and it is that omission which underlies the parties' dispute.

[8] Ms. Walker deposes that she agreed to lend $30,000 personally to Mr. Milley to assist him with his bagel shop and that the loan would be guaranteed by his mother, Lea Milley. Ms. Walker states that the agreement provided that the $30,000, plus interest at 10 percent per annum, would be repaid on demand or, if Mr. Milley missed a monthly interest payment, she had the option to demand the full sum then owing of principal and interest.

[9] Ms. Walker said the agreement also provided that Mr. Milley could defer payment for a five month period after she advanced the $30,000, following which period interest would become payable on a monthly basis. Mr. Milley did not make an interest payment until June 3, 1996, seven months after Ms. Walker advanced the $30,000. However, the first payment of $1,750 brought the balance owing down to $30,056.56 according to Ms. Walker's calculations. Mr. Milley essentially maintained the payments until February 1997, after which he made no payments for seven months. On October 28, 1997, Ms. Walker wrote to Mr. Milley, with a copy forwarded to Ms. Milley, seeking the arrears in the interest payments. In response, Mr. Milley made payments in November and December, 1997, but Ms. Walker received no further payments after that date.

[10] Ms. Walker, in February, 1998, learned Mr. Milley's bagel business had closed and she contacted Ms. Milley seeking payment of the loan pursuant to the guarantee. At Ms. Milley's request Ms. Walker on February 23, 1998 forwarded to Ms. Milley a copy of the guarantee faxed on October 31, 1995. Some correspondence followed between Ms. Walker and Ms. Milley, however, Ms. Walker did not receive funds to satisfy her claim. Ms. Walker commenced this action on November 25, 2002. Kalan Milley subsequently declared personal bankruptcy.

[11] Kalan Milley describes the funds advanced by Ms. Walker not as a loan, but as an investment by Ms. Walker in Benny's Bagels, an entity operated by Zen Bagel Centre Ltd. ("Zen Bagel") in which he, Kalan Milley, was the sole director. Mr. Milley deposes that his discussions with Ms. Walker involved her investing in Benny's Bagels, and that the investment was tied to the success of Benny's Bagels. He specifically denied acting in his personal capacity with Ms. Walker, stating that at all times he was representing the Benny's Bagels business operated by Zen Bagel.

[12] Mr. Milley agreed that Ms. Walker would receive a 10 percent return on her $30,000 investment but only if Benny’s Bagels was successful and could afford to pay such a return. Mr. Milley deposed that Ms. Walker agreed that no payments need be made while Benny's Bagels was starting its operation. He denied Ms. Walker’s statement that she could demand return of the $30,000, deposing that she would receive her investment only if Benny's Bagels was successful.

[13] Ms. Milley's position is that she was willing to provide a guarantee only if Ms. Walker advanced the $30,000 personally to her son, Kalan Milley, and that her faxed letter of October 31, 1995 reflected that willingness. However, she deposes that she was not willing to guarantee the success of Benny's Bagels or any investment that Ms. Walker made in that venture. Ms. Milley further stated that although she had indicated her willingness to guarantee a loan to her son, she anticipated that such a guarantee would require an actual guarantee outlining the terms and conditions regarding any funds loaned to her son, Kalan Milley. Ms. Milley stated she did not sign such a guarantee.

[14] Rule 18A of the Rules of Court provides that in order to obtain judgment on a summary trial there must be material in which the facts can be found that would allow the determination of the issues and, if so, that it would be just to render judgment in the circumstances.

[15] Inspiration Mgmt. Ltd. v. McDermid St. Lawrence Ltd. (1989), 36 B.C.L.R. (2d) 202 (C.A.) suggests that a trial judge should take a robust approach when faced with conflicts in the affidavit material filed in a Rule 18A application, striving where possible to make findings of fact out of the conflicts sufficient to resolve the issues and to give judgment where such a result is just in all the circumstances.

[16] The affidavits in this case reflect considerable conflict between the parties as to the arrangements which led Ms. Walker to advance $30,000 to Mr. Milley. I have considered the conflicts and conclude that this is not a situation in which I am able fairly to make the findings of fact required either to provide judgment to Ms. Walker or to dismiss the claim as sought by the defendants. The issues here are best dealt with in a trial with viva voce evidence where the credibility of the parties and witnesses can best be assessed.

[17] Other issues included a limitation defence and the admissibility of certain correspondence marked without prejudice. I conclude these too are matters best left to trial, rather than attempting to deal with issues in slices and, perhaps, unwittingly, constraining the trial judge.

[18] I remit the case to the trial list and I leave costs to be determined by the trial judge.

“R.M.L. Blair, J.”
The Honourable Mr. Justice R.M.L. Blair