The B.C. creator of an app with several government contracts to help respond to drug overdoses has been ordered to repay several loans totalling $158,000, with interest that could reach well over double the principal amount.
Business consultant Anne Graham connected with Jeff Hardy after Hardy finished a drug treatment program in 2017. While in treatment, someone that Hardy met in the program died of an overdose, an experience Justice Neena Sharma described as having a “dramatic impact” on Hardy and inspired him to found the Lifeguard Connect app.
After leaving treatment, Hardy founded Lifeguard Health as a sole proprietorship before incorporating it as Lifeguard Health Inc. The app allows people to set a timer if using drugs alone, and if the time lapses without any response from the app’s user, 911 is notified of a potential overdose with the phone’s internal GPS showing their location.
The app has contracts with the B.C. and Alberta governments, and is credited with saving 57 lives, according to a January report from CTV 撸奶社区.
In launching the business, Hardy connected with Graham through a non-profit organization that offers business planning services to entrepreneurs. Graham agreed to advise Hardy and further agreed to several loans over the course of about a year.
In November 2018, as Hardy was awaiting government funds, Graham agreed to loan him $25,000, to be repaid in the amount of $31,250 by Dec. 7 of that year.
But on Dec. 6, Hardy sought an extension on that loan and another $25,000 loan, with both to be paid back at $31,250 each in January 2019.
As Hardy continued to wait for government funds in spring 2019, Graham loaned Hardy another $53,000, this time at 20 per cent interest.
And in late March, the two agreed to another $25,000 loan. By then, the loans totalled $128,000 in principal, and they agreed to organize them together, with $194,206 due by Dec. 31, 2019.
Hardy was invited to Washington, D.C., in October 2019 to meet with U.S. government officials, and he asked Graham for a $30,000 loan to cover that trip with the same repayment terms as the previous loans.
When Hardy defaulted on the loans, Graham calculated the effective annual interest rates of 51.6 per cent on the first loan, 63.2 per cent on the second loan and 68.9 per cent on the third loan. In her court filings, Graham sought enforcement on the loans with interest rates capped at 60 per cent annually, a rate she similarly applied to the fourth loan.
With more than three years passing since December 2019, Graham calculated the total amount owing to be $491,561.
The defendants argued against those interest rates, saying there was no basis for the rates calculated. Graham admitted in discovery “she [was] unaware of how those interest rates were calculated,” Sharma wrote.
The defendants noted that all four loans’ interest rates exceeded the 60 per cent limit in the Criminal Code and that the amount owed should only reflect the principal amounts, or otherwise not exceed five per cent annually.
Graham argued that just because they didn’t agree upon an annual rate didn’t mean they didn’t agree upon interest.
Sharma noted the parties’ language in text messages and especially in a note from March 2019 largely reflected a fee for the loans, rather than interest rates.
As such, she found that Hardy owed $158,000 and ordered the two parties to come to an agreement on the effective annual interest rate based on the March 2019 note.
