The Plaintiff Applicants, Aaron and Donna Hansen sought enforcement of a loan agreement between themselves and the Defendants, Nicholas and Andrea Felgate, by way of Summary Judgment under Rules 7.2 and 7.3. Specifically, in 2019, Aaron loaned Nicholas $20,000 and Donna issued loans to Nicholas totalling $70,000. The terms and conditions of the loan agreements were reduced to writing in promissory notes by Nicholas, that he signed and forwarded to the Hansens.

Initially, the Defendants complied with the repayment terms and sent money from their bank accounts to both Aaron and Donna; however, regular payments abruptly stopped. The Hansens sought Summary Judgment for the principal amount of the loans plus interest, arguing that there were no issues that required a full hearing of the matter.

The issues in dispute was whether (i) the Defendant Nicholas had the capacity to contract at the time he entered into the agreements with the Plaintiff; and (ii) whether Andrea Felgate was a party to the loans.

Justice Millsap found Nicholas’ defence of “lack of capacity” to be without merit. The Court found that the evidence established that Nicholas may have been suffering from mania and/or psychosis at the material time he entered into the loan agreements, but that it was equally possible that he was not. Importantly, no expert medical evidence was presented, and it was his burden to prove that he did not have capacity. Here, Millsap J. wrote that “[n]otwithstanding his purportedly psychotic views about his own wealth or ability to create wealth, he clearly knew he was borrowing money, knew he would eventually have to pay it back and understood that he would have to pay back more than he borrowed”. As such, Millsap J. granted the Application for Summary Judgment against Nicholas.

Regarding Andrea, the Court determined that her role and liability could not be conclusively decided through Summary Judgment due to insufficient evidence about her involvement in the loan agreements. It was therefore found by Justice Millsap that the Summary Judgment Application against Andrea should fail. In this respect, the matter was remitted to Trial to determine the extent of Andrea’s liability.