The TFC Promissory Notes
Six clients agreed to advance funds to TFC on terms set out in fourteen
promissory notes. The notes were signed by Tiffin on behalf of TFC. The total
value of funds obtained was $700,000.
Twelve of the fourteen notes require that TFC pay principal and a single
interest payment on a given maturity date. The interest on the notes ranges
from 10% to 25% on the one year term.
The notes state:
9. Lender and Borrower intend that the relationship created an [sic]
evidenced by this note shall be solely that of debtor and creditor. Nothing
in this Note shall be construed as creating a joint venture, partnership,
tenancy in common, or joint tenancy between Lender and Borrower.
The notes all refer to the Securities Act: “This note shall utilize the accred-
ited investor exemption available in Ontario has [sic] modified from time to
time by the Ontario Securities Commission.”
All funds received for the promissory notes were deposited into TFC’s
corporate account. Funds from that account were disbursed “for general
business purposes” and to cover Mr. Tiffin’s personal expenses.
 At trial, the parties filed an agreed statement of facts dated
September 1, 2015. I reference the following additional facts from
that agreed statement of facts.
 The TFC promissory notes represented loans from six families
totalling $700,000 in principal. TFC owed a further $144,300 in
interest at maturity. The term of the notes varied; three were less
than 12 months and the remaining 11 were for over 12 months,
with two having indefinite terms. Each of the notes provided for
penalty interest at 2 per cent per month in the event of non-payment, plus interest on all amounts owing upon default “at the
highest rate allowable by law”.
 Each of the lenders was an existing TFC client who had
purchased insurance or investment products from Tiffin or TFC
 The notes were secured against a “toy soldier collection”
owned by TFC, and alleged by Tiffin to be worth $540,000.
 Mr. Tiffin and TFC admitted that they were not registered
to trade in securities, did not file a prospectus in relation to the
transactions at issue, and at the material times were prohibited
from trading in securities by order of the Ontario Securities
Commission. Accordingly, the trial judge began by stating [at
para. 3] that the sole issue at trial was “were these promissory
notes simple private loan agreements not subject to the Securities
Act or were they securities as defined by that statute?”