Executive Summary: Key Legal and Evidentiary Issues

• Characterization of substantial monetary advances as either loans or equity investments in a restaurant business and how that evolved over time.
• Impact of a later sworn statement and promissory note on crystallizing previously ambiguous financial arrangements between the parties.
• Credibility and evidentiary weight of documentary records (emails, sworn statement, promissory note) versus the parties’ conflicting recollections.
• Enforceability of a promissory note, including whether the signatories (individual and corporate) received sufficient valuable consideration.
• Application of the Bills of Exchange Act’s presumption of consideration for promissory notes and whether that presumption was rebutted on the record.
• Allegations of procedural unfairness on summary judgment, including whether the motion judge improperly decided the case on a theory not advanced in the pleadings or submissions.

Background and relationship between the parties

Jaymat Limited is a company controlled by Arthur Artuso. Over a period between 2018 and 2019, Artuso advanced significant funds through Jaymat to his friend, Gianluca (Pino/Joseph) Trichilo, and to companies created to run Trichilo’s restaurant operations, including the Vivo Pizza and Pasta business and Vivo Pizza Pasta Franchising Inc. The two men were not strangers dealing at arm’s length; they were friends collaborating on restaurant ventures. This personal relationship initially allowed both men to proceed without clearly defining, in formal legal terms, whether each advance was a loan or an investment. While substantial sums were transferred, only $15,000 were ever repaid, leaving a large exposure on Jaymat’s side. Among the advances was a $500,000 “bridge financing” loan that enabled Trichilo to purchase a house in Florida. There was also a personal loan of $33,000. The rest of the money was variously described in communications and discussions as either loans or investments, contributing to the later evidentiary dispute about the true nature of the parties’ financial arrangements.

Evolving financial arrangements and growing ambiguity

As the parties’ restaurant plans developed, the evidence showed that they did not initially fix a single, clear legal characterization for the full suite of advances. Some documentary records and emails could be read as suggesting that Artuso viewed himself as effectively a partner, and that at least part of the funding might operate like equity or “equity loans”. At the same time, other communications and the parties’ conduct supported the view that the funds were understood to be repayable loans. The motion judge later described this pre-promissory-note period as one in which the “inchoate nature of the advances was left up in the air” and the parties were content to live with that ambiguity while their friendship and the business prospects were intact. This historical fluidity around whether the money was investment capital or debt later became central to the litigation, because the appellants argued that, except for the bridge financing and a small personal loan, the remaining funds should be treated as investments rather than as loans repayable on demand.

Formalization through sworn statement and promissory note

In October 2021, as the relationship and the business situation deteriorated, the parties moved to formalize their financial dealings. On October 18, 2021, Trichilo signed a sworn statement confirming that the monies advanced by Jaymat were loans, rather than equity contributions. Four days later, on October 22, 2021, he executed a promissory note in favour of Jaymat in the principal amount of $2,100,000. The motion judge found that this promissory note was signed not only by Trichilo personally, but also on behalf of the corporate restaurant entity, making both the individual and corporate appellants liable. By consolidating the outstanding indebtedness into a single written instrument, the parties in effect crystallized the previously “inchoate” or ambiguous understanding into a legally enforceable debt obligation. Part of the consideration for this formalization included Jaymat’s forbearance from immediately enforcing the existing indebtedness and the forgiveness of $110,000 in interest on the bridge loan. These elements would later be critical to upholding the promissory note’s enforceability at both the trial and appellate levels.

Proceedings before the Superior Court: Summary judgment

Jaymat brought an action on the promissory note after the appellants defaulted. The matter proceeded by way of summary judgment before Justice Stevenson of the Superior Court of Justice. In response, Trichilo acknowledged owing the $500,000 bridge loan and the $33,000 personal loan, but argued that the remaining advances were investments in his restaurant business. He further claimed that he had been “tricked” or misled into assuming personal liability under the promissory note, effectively asserting that it was unfair or unconscionable to hold him to the full $2.1 million obligation. Justice Stevenson rejected this position. He found that the promissory note was enforceable against both the individual and corporate appellants, subject only to a small adjustment of $35,000, which had not been expressly pleaded in the amended Statement of Claim. In doing so, the motion judge accepted that the sworn statement and promissory note resolved any earlier confusion or fluidity over whether the advances were loans or equity, and treated the consolidated amount as a debt owing. The summary judgment awarded Jaymat $2,100,000, plus interest, against the appellants, reflecting the consolidated indebtedness under the note as adjusted. The reasons for judgment at first instance (2025 ONSC 1038) also considered the parties’ documentary record and credibility, rejecting Trichilo’s assertions that he had been misled into signing or that he did not intend to assume personal liability.

Consideration and the Bills of Exchange Act

A central legal issue at first instance, later revisited on appeal, concerned whether the promissory note was supported by valuable consideration. Under the Bills of Exchange Act, an antecedent debt or liability can constitute valid consideration for a promissory note, and there is a rebuttable presumption that every signatory receives value. The appellants argued that, apart from the acknowledged bridge and personal loans, the promissory note represented obligations for which they received no fresh value at the time of execution. The motion judge applied the statutory presumption and held that it had not been rebutted. He concluded that the antecedent indebtedness of both appellants, combined with Jaymat’s forbearance from immediate enforcement and the forgiveness of $110,000 in interest on the bridge financing, was sufficient consideration for the promissory note. This reasoning effectively undercut the argument that the note was a mere paper device unsupported by real value.

Appeal grounds: Procedural unfairness and evidentiary complaints

The appellants challenged the summary judgment in the Court of Appeal for Ontario. One key ground of appeal alleged procedural unfairness. They argued that the motion judge decided the case based on a theory not pleaded or argued—that the advances were “inchoate” and left deliberately ambiguous until the sworn statement and promissory note. According to the appellants, neither side’s pleadings nor submissions advanced such a theory, and it was therefore unfair for the judge to rely on it as the basis for judgment. They also contended that the motion judge’s factual findings on the characterization of the advances were not supported by the evidentiary record. In particular, they pointed to email exchanges and other documents which, in their view, showed that Artuso treated the advances as equity or partnership capital rather than straightforward loans. This documentary record, they said, proved that most of the funds should not have been swept into a single debt obligation under the promissory note. Finally, they renewed their argument that the promissory note lacked valuable consideration, asserting that if the advances were not loans from the start, no valid pre-existing indebtedness could support the note.

The Court of Appeal’s reasoning and treatment of the issues

The Court of Appeal (Trotter, Copeland and Gomery JJ.A.) dismissed all grounds of appeal. On the alleged procedural unfairness, the court held that the motion judge did not rely on any novel or unpleaded theory. The notion that the parties’ pre-2021 arrangements were ambiguous, evolving, and not definitively classified as loans or investments was, in the Court of Appeal’s view, a fair description of the evidentiary record and was entirely consistent with the parties’ own materials. Jaymat’s factum at first instance expressly acknowledged that to the extent there was confusion about classification, it was resolved by the sworn statement and promissory note. Likewise, the Statement of Defence admitted that at the time the monies were advanced, it had not yet been decided whether they would be loans or investments. In that context, the motion judge’s description of the arrangements as “ambiguous” and “inchoate” was not an impermissible new theory but a legitimate synthesis of the evidence. Regarding the evidentiary complaint, the Court of Appeal emphasized that the motion judge was not bound to choose a single, rigid version of events advanced by either side. It was open to him, on a summary judgment record, to find that the prior arrangements were fluid and that documents suggesting partnership or equity coexisted with a broader understanding that the funds would be repayable. The Court of Appeal refused to reweigh this evidence, noting that such factual assessments attract deference on appeal.

Appellate treatment of consideration and enforceability

On the consideration issue, the Court of Appeal upheld the motion judge’s application of the Bills of Exchange Act. It agreed that the presumption of valuable consideration for a promissory note had not been rebutted by the appellants. The court accepted that an antecedent debt or liability, together with forbearance from immediate enforcement and the forgiveness of substantial interest, constituted valid consideration. In particular, the forgiveness of $110,000 in interest on the bridge financing and Jaymat’s agreement not to press for immediate payment formed part of the value furnished to the appellants when they agreed to formalize the indebtedness in a $2.1 million note. The court found no legal error in the motion judge’s approach and no basis to disturb his factual finding that adequate consideration existed. As a result, the argument that the promissory note was unenforceable for lack of consideration failed.

Outcome and financial consequences

Having rejected all grounds of appeal, the Court of Appeal dismissed the appeal from the summary judgment in its entirety. This left intact the motion judge’s order enforcing the promissory note in favour of Jaymat Limited for $2,100,000, plus interest, against both the individual and corporate appellants, subject to the $35,000 adjustment applied at first instance. On costs, the Court of Appeal ordered the appellants to pay Jaymat $22,000 for the appeal, inclusive of taxes and disbursements, noting that this figure reflected a prior costs order of $15,000 that had been made in the appellants’ favour in an earlier related matter. In practical terms, Jaymat Limited emerges as the successful party across both levels of court: it holds a principal monetary judgment of $2.1 million plus interest on the promissory note together with $22,000 in appeal costs. The precise total of all amounts payable to Jaymat, including all interest and any trial-level costs, cannot be fully determined from the available reasons, but the core financial outcome is that Jaymat’s $2.1 million debt claim was upheld and supplemented by a significant costs award on appeal.