Manulife Bank of Canada v. Conlin et al., (1996) 203 N.R. 81 (SCC)

• Judge: Gonthier, Cory, Iacobucci and Major, JJ.
• Court: Supreme Court of Canada
• Case Date: Thursday May 30, 1996
• Jurisdiction: Canada (Federal)
• Citations: (1996), 203 N.R. 81 (SCC);[1996] 3 SCR 415;203 NR 81;1996 CanLII 182 (SCC);6 RPR (3d) 1;66 ACWS (3d) 555;[1996] CarswellOnt 4284;139 DLR (4th) 426;30 OR (3d) 577;30 BLR (2d) 1;[1996] ACS no 101;94 OAC 161;[1996] SCJ No 101 (QL)

Manulife Bk. v. Conlin (1996), 203 N.R. 81 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Manulife Bank of Canada (appellant) v. John Joseph Conlin (respondent)

(24499)

Indexed As: Manulife Bank of Canada v. Conlin et al.

Supreme Court of Canada

La Forest, L'Heureux-Dubé, Sopinka,

Gonthier, Cory, Iacobucci and Major, JJ.

October 31, 1996.

Summary:

A wife gave a bank a three year mortgage on an apartment building she owned. Her husband signed as a guarantor. At the end of the initial three year term, the wife renewed the mortgage. The husband, now separated from the wife, was not informed of the renewal. Upon default, the bank claimed against the husband, as guarantor, for the amount due under the mortgage. The hus­band claimed that he was released from his obligation by the renewal of the mortgage. The trial judge granted the bank summary judgment. The husband appealed.

The Ontario Court of Appeal, Robins, J.A., dissenting, in a decision reported at 75 O.A.C. 117, allowed the appeal. The bank appealed.

The Supreme Court of Canada, L'Heureux-Dubé, Gonthier and Iacobucci, JJ., dissenting, dismissed the appeal.

Courts - Topic 2105

Jurisdiction - Appellate jurisdiction - Court of Appeal - Civil appeals - A bank claimed from a guarantor the amount owing under a mortgage - The guarantor claimed that he was released from his obligation because he was not informed of the renewal of the mortgage - The trial judge granted the bank summary judgment - The appeal court allowed the guarantor's appeal and dismissed the action - The Supreme Court of Canada held that the appeal court had jurisdiction to make the decision - See paragraphs 1, 68 to 75.

Guarantee and Indemnity - Topic 223

The contract - Interpretation - Require­ment of strict construction - [See Guar­antee and Indemnity - Topic 226 ].

Guarantee and Indemnity - Topic 226

The contract - Interpretation - Uncertainty or ambiguity - The Supreme Court of Canada stated that "it is eminently fair that if there is any ambiguity in the terms used in the guarantee, the words of the docu­ments should be construed against the party which drew it, by applying the contra proferentem rule" - See paragraph 8 - The court also affirmed the validity of the statement that "the surety is a favoured creditor in the eyes of the law whose obligation should be strictly examined and strictly construed" - See paragraph 10.

Guarantee and Indemnity - Topic 2518

Discharge and other defences of surety - Mortgages - A wife gave a bank a three year mortgage on a commercial property she owned - Her husband signed as guar­antor and principal debtor - The mortgage contained a renewal clause and a guaran­tee clause that stipulated that the parties remained liable notwithstanding an exten­sion of time or variation of interest rate - At the end of the term, the now estranged wife renewed the mortgage at a higher interest rate - The husband was not notified of the renewal - Upon default, the mortgagee sued the husband for the amount owing under the mortgage - The Supreme Court of Canada held that, because of the renewal without notice, the husband was relieved of liability either as a guarantor or as a principal debtor - See paragraphs 1 to 34.

Cases Noticed:

Holme v. Brunskill (1878), 3 Q.B.D. 495 (C.A.), refd to. [para. 2].

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

Bauer v. Bank of Montreal, [1980] 2 S.C.R. 102; 32 N.R. 191, refd to. [para. 4].

First City Capital Ltd. v. Hall and de Haan (1993), 61 O.A.C. 212; 11 O.R.(3d) 792 (C.A.), refd to. [para. 4].

Holland-Canada Mortgage Co. v. Hutchings, [1936] S.C.R. 165, refd to. [para. 10].

Alberta Opportunity Co. v. Moulton et al., [1991] 2 W.W.R. 624; 112 A.R. 87 (C.A.), refd to. [para. 11].

Alberta Opportunity Co. v. Schinnour - see Alberta Opportunity Co. v. Moulton et al.

Citadel General Assurance v. Johns-Manville Canada Inc. et al., [1983] 1 S.C.R. 513; 47 N.R. 280, refd to. [para. 12].

Canadian Imperial Bank of Commerce v. Patel (1990), 72 O.R.(2d) 109 (H.C.), refd to. [para. 19].

Co-Operative Trust Co. of Canada v. Kirkby and Thorpe, [1986] 6 W.W.R. 90; 51 Sask.R. 298 (Q.B.), refd to. [para. 31].

Royal Trust Co. v. Reid and Farries En­terprises Ltd. (1985), 54 Nfld. & P.E.I.R. 201; 160 A.P.R. 201; 40 R.P.R. 287 (P.E.I.C.A.), refd to. [para. 31].

Veteran Appliance Service Co. v. 109272 Development Ltd. and Brosseau et al. (1986), 67 A.R. 117 (Q.B.), refd to. [para. 31].

River Wear Commissioners v. Adamson (1877), 2 App. Cas. 743 (H.L.), refd to. [para. 40].

Sydall v. Castings Ltd., [1967] 1 Q.B. 302 (C.A.), refd to. [para. 42].

Inland Revenue Commissioners v. Williams, [1969] 1 W.L.R. 1197 (Ch.), refd to. [para. 45].

Rotenberg v. York (Borough) (1976), 13 O.R.(2d) 101 (C.A.), refd to. [para. 69].

Keltic Leasing Corp. v. Curtis (1993), 133 N.B.R.(2d) 73; 341 A.P.R. 73 (C.A.), refd to. [para. 74].

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488, refd to. [para. 79].

Pense v. Northern Life Assurance Co. (1907), 15 O.L.R. 131, refd to. [para. 79].

Stevenson v. Reliance Petroleum Ltd., [1956] S.C.R. 936, refd to. [para. 80].

Cornish v. Accident Insurance Co. (1889), 23 Q.B.D. 453 (C.A.), refd to. [para. 80].

Statutes Noticed:

Courts of Justice Act, R.S.O. 1990, c. C-43, sect. 134(1) [para. 68].

Rules of Civil Procedure (Ont.), rule 1.04(1), rule 20, rule 20.04(2), rule 20.04(4) [para. 70]; rule 39.02(1) [para. 73].

Authors and Works Noticed:

Black's Law Dictionary (5th Ed. 1979), pp. 523, 1165 [para. 29].

Concise Oxford Dictionary of Current English (9th Ed. 1995), p. 476 [para. 29].

Côté, Pierre-André, Interpretation of Leg­islation in Canada (2nd Ed. 1991), pp. 449 to 453, 457, 458 [para. 46].

Driedger, Elmer A., Construction of Stat­utes (3rd Ed. 1994), pp. 131 [para. 41]; 428, 468, 474 [para. 46].

Fridman, G.H.L., The Law of Contract in Canada (3rd Ed. 1994), pp. 470, 471 [para. 9].

McGuinness, Kevin Patrick, The Law of Guarantee (2nd Ed. 1996), pp. 239 [para. 79]; 244 [para. 9]; 534, 541 [para. 3]; 546, 547 [para. 5]; 556 [para. 91]; 612, 613 [para. 9]; ¶¶ 10.23, 10.51 [para. 76].

Counsel:

H. Stephen Lee, for the appellant;

Raymond F. Leach and Barbara F. Fischer for the respondent.

Solicitors of Record:

Lee, Bowden, Concord, Ontario, for the appellant;

Siskind, Cromarty, Ivey & Dowler, Lon­don, Ontario, for the respondent.

This appeal was heard on May 30, 1996, before La Forest, L'Heureux-Dubé, Sopinka, Gonthier, Cory, Iacobucci and Major, JJ., of the Supreme Court of Canada. On October 31, 1996, the judgment of the court was delivered in both official languages and the following opinions were filed:

Cory, J. (La Forest, Sopinka and Major, JJ., concurring) - see paragraphs 1 to 34;

L'Heureux-Dubé, J., dissenting - see paragraphs 35 to 47;

Iacobucci, J., dissenting (Gonthier, J., concurring) - see paragraphs 48 to 101.