Bank of Montreal et al. v. Javed et al., 2016 ONCA 49

JudgeCronk, Pepall and Lauwers, JJ.A.
CourtCourt of Appeal (Ontario)
Case DateTuesday October 13, 2015
JurisdictionOntario
Citations2016 ONCA 49;(2016), 344 O.A.C. 237 (CA)

Bk. of Mtrl. v. Javed (2016), 344 O.A.C. 237 (CA)

MLB headnote and full text

Temp. Cite: [2016] O.A.C. TBEd. JA.034

Bank of Montreal for itself and on behalf of all creditors of Amer Javed, Ileshkumar Shah also known as Ileshkumarpadm Shah and Mayaben Ileshkumar Shah (plaintiff/respondent) v. Amer Javed, Ileshkumar Shah also known as Ileshkumarpadm Shah and Mayaben Ileshkumar Shah (defendants/ appellant s)

(C60246; 2016 ONCA 49)

Indexed As: Bank of Montreal et al. v. Javed et al.

Ontario Court of Appeal

Cronk, Pepall and Lauwers, JJ.A.

January 18, 2016.

Summary:

Shah and Javed provided a joint and several guarantee to the Bank of Montreal to secure a loan to 7596308 Canada Inc. (the "Company"). Shah's guarantee was limited to the amount of $53,371.50, plus interest The Company defaulted on the loan in 2014. The Bank sued Shah for payment under his guarantee and brought a motion for summary judgment.

The Ontario Superior Court, in a decision with neutral citation 2015 ONSC 1229, granted summary judgment on the personal guarantee and ordered Shah to pay the bank $55,521.79. The motion judge also set aside a transfer of Shah's half-interest in the matrimonial home to his spouse on the basis that it was a fraudulent conveyance. Shah appealed. He advanced two arguments: first, the bank's conduct rendered the loan transaction unconscionable; and second, the motion judge erred in finding that Shah's transfer of his interest in the matrimonial home to his wife was a fraudulent conveyance.

The Ontario Court of Appeal dismissed the appeal.

Banks and Banking - Topic 2101

Liability of banks to third parties - Liability to guarantors of loans - General - [See Guarantee and Indemnity - Topic 2667 ].

Banks and Banking - Topic 5145

Loans - Duties of bank - To guarantors - [See Guarantee and Indemnity - Topic 2667 ].

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - [See Guarantee and Indemnity - Topic 2667 ].

Contracts - Topic 9350

Unconscionable transactions relief - Conditions for relief - What constitutes harsh and unconscionable - [See Guarantee and Indemnity - Topic 2667 ].

Equity - Topic 1123

Equitable relief - Contracts - Unconscionablility - Unconscionable conduct - [See Guarantee and Indemnity - Topic 2667 ].

Guarantee and Indemnity - Topic 106

The contract - Nature of - Creditors' duty of disclosure - [See Guarantee and Indemnity - Topic 2667 ].

Guarantee and Indemnity - Topic 2667

Discharge and other defences of surety - Acts of creditor - Duties of creditor - In early 2011, Shah and Javed provided a joint and several guarantee to a bank to secure a loan to 7596308 Canada Inc. (the "Company") - Shah's guarantee was limited to $53,371.50, plus interest - In late 2011, Shah resigned as a director of the Company and ceased to have an active role in it, although he remained vice-president - The Company defaulted on the loan in 2014 - A motion judge granted the bank summary judgment on the personal guarantee and ordered Shah to pay the bank $55,521.79 - Shah appealed - He argued that the bank's conduct rendered the loan transaction unconscionable - In 2013, Shah had contacted the bank seeking access to the Company's business account information, but was refused - Shah argued that it was unconscionable for the bank to refuse to provide the information, particularly as to the balance of the loan that he had personally guaranteed - Shah argued that Bhasin v. Hrynew (2014 SCC) modified the test for unconscionability by requiring the court to import "a general organizing principle of good faith and recognizing a duty to perform contracts honestly" - He asserted that the effect of Bhasin was to extend the test for unconscionability from an assessment of the equities of an agreement or transaction, to the assessment of a party's performance of its obligations under the agreement - The Ontario Court of Appeal dismissed Shah's appeal - The motion judge did not err in rejecting Shah's unconscionability argument - Bhasin did not modify the common law test for unconscionability - Bhasin recognized a duty of honest performance - There was no basis to suggest that the bank did not conduct itself honestly throughout - However, the court held that the bank breached its contractual obligation to provide information to Shah, in accordance with the terms of the guarantee - The guarantee contemplated that the guarantor(s) could seek information from the bank regarding the debt secured by the guarantee - However, the bank's breach of its contractual disclosure obligation was not sufficiently serious to give rise to a right of rescission in Shah's favour - Nor did Shah discharge his positive obligation to prove damages for the bank's breach.

Cases Noticed:

Teitelbaum v. Dyson et al., [2000] O.T.C. 876; 7 C.P.C.(5th) 356 (Sup. Ct.), affd. (2001), 151 O.A.C. 399 (C.A.), refd to. [para. 7].

Bhasin v. Hrynew et al., [2014] 3 S.C.R. 494; 464 N.R. 254; 584 A.R. 6; 623 W.A.C. 6; 2014 SCC 71, consd. [para. 11].

Citadel General Assurance Co. v. Johns-Manville Canada Inc. et al., [1983] 1 S.C.R. 513; 47 N.R. 280, refd to. [para. 17].

Bank of India v. Trans Continental Commodity Merchants Ltd. & Patel, [1982] 1 Lloyd's Rep. 506 (Q.B. Com. Ct.), affd. [1983] 2 Lloyd's Rep. 298 (C.A.), refd to. [para. 20].

Bank of Montreal v. Wilder et al., [1986] 2 S.C.R. 551; 70 N.R. 341, refd to. [para. 20].

Pax Management Ltd. et al. v. Canadian Imperial Bank of Commerce, [1992] 2 S.C.R. 998; 141 N.R. 324; 15 B.C.A.C. 81; 27 W.A.C. 81, refd to. [para. 20].

Manulife Bank of Canada v. Conlin et al., [1996] 3 S.C.R. 415; 203 N.R. 81; 94 O.A.C. 161, refd to. [para. 20].

Counsel:

Shahzad Siddiqui, for the appellants;

No one appearing, for Amer Javed;

Ian Klaiman, for the respondent.

This appeal was heard on October 13, 2015, before Cronk, Pepall and Lauwers, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Lauwers, J.A., and was released on January 18, 2016.

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9 practice notes
  • Concord Pacific Acquisitions Inc. v. Oei, 2019 BCSC 1190
    • Canada
    • Supreme Court of British Columbia (Canada)
    • July 19, 2019
    ...that has not occurred as courts have applied the principle of good faith performance in a restrained manner. In Bank of Montréal v. Javed, 2016 ONCA 49, for example, the court rejected the appellant's argument that the good faith principle in Bhasin modified the test for unconscionability: ......
  • Two Views of the Cathedral: Civilian Approaches, Reasonable Expectations, and the Puzzle of Good Faith's Past and Future.
    • Canada
    • Queen's Law Journal Vol. 44 No. 2, March 2019
    • March 22, 2019
    ...minimal payments constituted a breach of said duty). (30.) The case law is already ample on this point. See Bank of Montreal v Javed, 2016 ONCA 49 at para 12 (refusal to extend the doctrine of unconscionability to cover contractual performance); Reserve Properties Limited v 2174689 Ontario ......
  • The Dispute Resolution Review - 9th Edition
    • Canada
    • Mondaq Canada
    • June 29, 2017
    ...Jean Coutu Group (PJC) Inc v. AG (Canada), 2016 SCC 55. 4 2016 SCC 51. 5 2016 SCC 29. 6 2016 SCC 52. 7 2016 ONCA 332. 8 2016 ABCA 360. 9 2016 ONCA 49. 10 2016 ONCA 11 2016 ONCA 771. 12 Alberta, Rules of Court, Alta Reg 124/2010 [Alberta Rules]; British Columbia, Supreme Court Civil Rules, B......
  • The Ontario Court Of Appeal Declines To Extend The Doctrine Of Unconscionability Into The Performance Of Contracts
    • Canada
    • Mondaq Canada
    • January 28, 2016
    ...in a very restrained manner by courts across Canada. The recent decision of the Ontario Court of Appeal in Bank of Montreal v. Javed, 2016 ONCA 49 is a further example of this The Good Faith Principle In Bhasin, the Supreme Court of Canada recognized a general organizing principle of good f......
  • Request a trial to view additional results
3 cases
  • Concord Pacific Acquisitions Inc. v. Oei, 2019 BCSC 1190
    • Canada
    • Supreme Court of British Columbia (Canada)
    • July 19, 2019
    ...that has not occurred as courts have applied the principle of good faith performance in a restrained manner. In Bank of Montréal v. Javed, 2016 ONCA 49, for example, the court rejected the appellant's argument that the good faith principle in Bhasin modified the test for unconscionability: ......
  • RBC v. Irfan Rahman aka Syed Shah Irfanur Rahman, et al., 2020 ONSC 7599
    • Canada
    • Superior Court of Justice of Ontario (Canada)
    • December 8, 2020
    ...The present case fits into this category as it is an enforcement of a guarantee for liquidated damages: Bank of Montreal v. Javed, 2016 ONCA 49, at para. [21] With these guiding principles in mind, I have determined that there is no genuine issue requiring a trial based on the uncontested e......
  • Ching v. Pier 27 Toronto Inc., 2019 ONSC 6073
    • Canada
    • Superior Court of Justice of Ontario (Canada)
    • October 18, 2019
    ...inconsistent. In any event, “…a duty of honest performance should not be confused with a duty of disclosure”: Bank of Montreal v. Javed, 2016 ONCA 49, at para. ISSUE #3: DID THE PLAINTIFFS ACCEPT THE DEFENDANT’S REPUDIATION OF THE APS? [103] The Defendant’s extension of the Confirmed Occupa......
5 firm's commentaries
  • The Dispute Resolution Review - 9th Edition
    • Canada
    • Mondaq Canada
    • June 29, 2017
    ...Jean Coutu Group (PJC) Inc v. AG (Canada), 2016 SCC 55. 4 2016 SCC 51. 5 2016 SCC 29. 6 2016 SCC 52. 7 2016 ONCA 332. 8 2016 ABCA 360. 9 2016 ONCA 49. 10 2016 ONCA 11 2016 ONCA 771. 12 Alberta, Rules of Court, Alta Reg 124/2010 [Alberta Rules]; British Columbia, Supreme Court Civil Rules, B......
  • The Ontario Court Of Appeal Declines To Extend The Doctrine Of Unconscionability Into The Performance Of Contracts
    • Canada
    • Mondaq Canada
    • January 28, 2016
    ...in a very restrained manner by courts across Canada. The recent decision of the Ontario Court of Appeal in Bank of Montreal v. Javed, 2016 ONCA 49 is a further example of this The Good Faith Principle In Bhasin, the Supreme Court of Canada recognized a general organizing principle of good f......
  • Canadian Appeals Monitor – SCC Monitor Post For July 2016
    • Canada
    • Mondaq Canada
    • August 11, 2016
    ...the outcome, as this was not a Charter challenge but rather a judicial review. Unconscionability in Contract: Bank of Montreal v. Javed, 2016 ONCA 49 ( 36902) - Shah was a director of a corporation and he (along with Mr. Jahved) provided a personal guarantee to BMO to secure a small busines......
  • When Is A Guarantee Unenforceable?
    • Canada
    • Mondaq Canada
    • February 9, 2016
    ...a guarantee on the basis of the creditor's improper conduct. A recent decision of the Ontario Court of Appeal, Bank of Montreal v. Javed, 2016 ONCA 49, per Lauwers J.A. ("Javed") illustrates that a guarantor or surety will not lightly be discharged from obligations under a guarantee based o......
  • Request a trial to view additional results
1 books & journal articles

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