Bulut v. Carter et al., 2014 ONCA 424

• Judge: Juriansz, Epstein and Pepall, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: April 14, 2014
• Jurisdiction: Ontario
• Citations: 2014 ONCA 424;(2014), 322 O.A.C. 58 (CA)

Bulut v. Carter (2014), 322 O.A.C. 58 (CA)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. JN.005

Nikolas (Nicholas) Bulut (plaintiff/appellant/respondent by way of cross-appeal) v. William Russell Carter , Marilyin Rose Carter, Kurt Russell Carter and Amberlyn Miszcyzk (defendants/respondents/ appellant by way of cross-appeal )

(C55507; 2014 ONCA 424)

Indexed As: Bulut v. Carter et al.

Ontario Court of Appeal

Juriansz, Epstein and Pepall, JJ.A.

May 23, 2014.

Summary:

Bulut and Carter were engaged in business dealings involving the Carter family company. Carter, on behalf of the company, signed a promissory note in the amount of $300,000 in favour of Bulut, which he also personally guaranteed. Other Carter family members also executed the guarantee. Bulut sued, seeking payment of $300,000, plus interest, from Carter and the Carter family members through the enforcement of their guarantees.

The Ontario Superior Court awarded judgment against Carter in his capacity as guarantor of the note. However, the court held that the Carter family members had satisfied the test for non est factum and therefore were not liable as guarantors. The action against them was dismissed. Bulut appealed the dismissal of the action against the Carter family members. He submitted that the defence of non est factum had not been pleaded and, even if it were, it was not supported by the evidence. Carter cross-appealed, seeking to set aside the judgment against him on the basis that the promissory note was given without consideration and the guarantee was therefore unenforceable.

The Ontario Court of Appeal allowed Bulut's appeal and dismissed Carter's cross-appeal.

Contracts - Topic 1601

Formation of contract - Mistake, misunderstanding or misrepresentation - Plea of non est factum - [See Contracts - Topic 1602 ].

Contracts - Topic 1602

Formation of contract - Mistake, misunderstanding or misrepresentation - Non est factum - Bars - Carelessness or negligence - Carter, on behalf of the Carter family company, signed a promissory note in the amount of $300,000 in favour of Bulut, which he also personally guaranteed - Other Carter family members also executed the guarantee - Bulut sued Carter and the Carter family members to enforce their guarantees - The trial judge awarded judgment against Carter in his capacity as guarantor of the note - However, she held that the Carter family members had satisfied the test for non est factum and she dismissed the action against them - Bulut appealed - He submitted that the defence of non est factum had not been pleaded and, even if it were, it was not supported by the evidence - The Ontario Court of Appeal allowed the appeal - The defence of non est factum was not expressly identified in the amended statement of defence and counterclaim - However, in their pleading, the respondents did allege that they did not understand the nature of the document they signed - On this basis, they were entitled to rely on the defence, if proven - However, the trial judge erred in concluding that the Carter family members established the defence - The Carter family members were careless in signing the one page document - Further, while the trial judge recognized that for non est factum to apply the guarantee must have been signed as a result of misrepresentation as to its nature, she did not consider that part of the test - The Carter family members were unable to demonstrate that they signed the guarantee due to any misrepresentation - See paragraphs 11 to 26.

Contracts - Topic 2861

Consideration - What constitutes consideration - General - Bulut and Carter were engaged in business dealings involving the Carter family company (Carter's Printing) - Carter, on behalf of the company, signed a promissory note in the amount of $300,000 in favour of Bulut, which he also personally guaranteed - Other Carter family members also executed the guarantee - The Ontario Court of Appeal held that there was ample evidence to support of a finding of consideration for the promissory note - Carter admitted that funds were advanced to Carter's Printing - There was evidence that the promissory note was given in order to ensure that the company could continue to engage in business dealings with Bulut - See paragraphs 27 to 28.

Guarantee and Indemnity - Topic 126

The contract - Formation of contract - Non est factum - Mistake or misrepresentation - [See Contracts - Topic 1602 ].

Guarantee and Indemnity - Topic 129

The contract - Formation of contract - Non est factum - Bar - Carelessness - [See Contracts - Topic 1602 ].

Guarantee and Indemnity - Topic 144

The contract - Consideration - What constitutes consideration - [See Contracts - Topic 2861 ].

Cases Noticed:

Rodaro et al. v. Royal Bank of Canada et al. (2002), 157 O.A.C. 203; 59 O.R.(3d) 74 (C.A.), refd to. [para. 12].

Marvco Color Research Ltd. v. Harris and Harris, [1982] 2 S.C.R. 774; 45 N.R. 302, refd to. [para. 18].

Gallie v. Lee - see Saunders v. Anglia Building Society.

Saunders v. Anglia Building Society, [1970] 3 All E.R. 961; [1970] 3 W.L.R. 1078; 114 Sol. Jo. 885 (H.L.), affing, [1969] 1 All E.R. 1062; [1971] A.C. 1004, refd to. [para. 21].

Dorsch v. Freeholders Oil Co. Ltd., [1965] S.C.R. 670, refd to. [para. 24].

Counsel:

Sean C. Flaherty, for the appellant/respondent by way of cross-appeal;

Howard W. Reininger, for the respondents/appellant by way of cross-appeal.

This appeal and cross-appeal were heard on April 14, 2014, before Juriansz, Epstein and Pepall, JJ.A., of the Ontario Court of Appeal. The Court of Appeal delivered the following endorsement on May 23, 2014.