RoyNat Ltd. v. Sommerville, MacArthur, Jessome, Parker and Ruben, (1982) 40 N.B.R.(2d) 578 (CA)

• Judge: Hughes, C.J.N.B., Richard and La Forest, JJ.A.
• Court: Court of Appeal (New Brunswick)
• Case Date: September 15, 1981
• Jurisdiction: New Brunswick
• Citations: (1982), 40 N.B.R.(2d) 578 (CA)

RoyNat Ltd. v. Sommerville (1982), 40 N.B.R.(2d) 578 (CA);

    40 R.N.-B.(2e) 578; 105 A.P.R. 578

MLB headnote and full text

Sommaire et texte intégral

[French language version follows English language version]

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

.........................

Roynat Ltd. v. Sommerville, MacArthur, Jessome, Parker and Ruben

(27/81/CA)

Indexed As: RoyNat Ltd. v. Sommerville, MacArthur, Jessome, Parker and Ruben

Répertorié: RoyNat Ltd. v. Sommerville, MacArthur, Jessome, Parker and Ruben

New Brunswick Court of Appeal

Hughes, C.J.N.B., Richard and La Forest, JJ.A.

May 6, 1982.

Summary:

Résumé:

Five shareholders of a company guaranteed, in varying limited amounts, a loan made by the plaintiff to their company. Upon default by the company, the plaintiff brought an action against the defendants on their guarantees. The action against three of the defendants was discontinued.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported in (1982), 35 N.B.R.(2d) 236; 88 A.P.R. 236, allowed the plaintiff's action against the other two guarantors. The guarantors appealed.

The New Brunswick Court of Appeal dismissed the appeal.

Deeds and Documents - Topic 4583

Additions and alterations - Alterations - Material alterations - General - The New Brunswick Court of Appeal discussed the history of the rule that a subsequent material alteration avoided an instrument - See paragraphs 34 to 37.

Deeds and Documents - Topic 4584

Additions and alterations - Alterations - Material alterations - Defined - The New Brunswick Court of Appeal stated that for an alteration in a document to be material, it was not necessary that fraud be proved, once the alteration was attributed to the maker of the instrument - The court also stated that the alteration need not necessarily be prejudicial to the party seeking to avoid it - The court stated that an alteration was material if it varied the "legal position of the parties ... or ... the legal incidents of the instrument" - See paragraphs 49 to 52.

Deeds and Documents - Topic 4584

Additions and alterations - Alterations - Material alterations - Defined - The solicitor for the lender of funds secured by a debenture changed the date of the debenture after its execution - The New Brunswick Court of Appeal affirmed that the alteration of the date was not a material alteration, because the alteration did not affect the rights, liabilities or legal position of the parties or the legal effect of the debenture - See paragraphs 10 to 14.

Deeds and Documents - Topic 4590

Additions and alterations - Alterations - Alterations by third parties - The New Brunswick Court of Appeal stated the rule that an alteration to a document by a stranger not authorized by the parties did not excuse the parties from performance or avoid the document - See paragraphs 36, 43 to 46.

Deeds and Documents - Topic 4590

Additions and alterations - Alterations - Alterations by third parties - The solicitor for the lender of funds secured by a debenture altered the date of the debenture after its execution without authorization of the parties - The New Brunswick Court of Appeal held that the solicitor was not acting as the agent of the lender in altering the debenture and therefore the alteration was, in effect, made by a stranger to the instrument - The court held that the guarantors were bound by the debenture, where it was altered by an unauthorized stranger - See paragraphs 36 to 47.

Guarantee and Indemnity - Topic 2740

Discharge of surety - Security - Loss of or change of by creditor - Agreement excluding creditor's duty - A guarantee provided that the liability of the guarantors was not affected by the creditor's "abstention from the taking or perfecting of any rights, privileges, mortgages or securities" - The date of execution of the security contained in the affidavit of execution was altered, thereby causing the security to be registered illegally - The New Brunswick Court of Appeal held that the guarantors had no defence that the creditor failed to preserve the security, because the guarantee provided that the creditor had no obligation to protect its security - See paragraphs 15 to 18.

Interest - Topic 5006

Interest as damages - Termination of - On judgment on appeal - Two shareholders, who guaranteed their company's bank loan for $80,000 and $35,000, respectively, were successfully sued on their guarantees - Interest was specified in the guarantee as payable at 14.5% per annum from the date of demand of payment - The trial judge awarded interest from the date of demand until the date of judgment - The guarantors unsuccessfully appealed - The New Brunswick Court of Appeal awarded additional interest at 14.5% per annum from the date of the trial judgment until the appeal judgment on $80,000 and $35,000, respectively - See paragraph 19.

Practice - Topic 9012

Appeals - Restrictions on argument on appeal - Issues not raised in pleadings or in prior proceedings - The New Brunswick Court of Appeal considered an issue which arose out of the defendants' pleadings; although it was not listed as a ground of appeal nor dealt with at trial - See paragraphs 27 to 33.

Cases Noticed:

Tidd et al. v. La Salle Industrial Finance Corporation (1945), 61 N.E.R.(2d) 774, consd. [para. 12].

Bauer v. Bank of Montreal, [1980] 2 S.C.R. 102; 32 N.R. 191, consd. [para. 16].

Western Dominion Investment Co. v. MacMillan, [1925] 2 D.L.R. 442; affd. [1925] 4 D.L.R. 562, refd to. [para. 26].

E & P Holdings v. Koffler Stores Ltd. and Rocca Group Ltd. (1982), 36 N.B.R.(2d) 658; 94 A.P.R. 658, dist. [para. 30].

Royal Bank of Canada v. Ruben (1980), 29 N.B.R.(2d) 612; 66 A.P.R. 612, dist. [para. 31].

Pigot's case (1614), 11 Co. R. 266; 77 E.R. 1177, refd to. [para. 34].

Master v. Miller (1791), 4 Term Rep. 320; 100 E.R. 1043, refd to. [para. 34].

Aldous v. Cornwell (1868), L.R. 3 Q.B. 573, refd to. [para. 34].

Davidson v. Cooper (1844), 13 M. & W. 342; 153 E.R. 142, refd to. [para. 34].

Roberto v. Bumb, [1943] 2 D.L.R. 613, refd to. [para. 35].

Bishop of Crediton v. Bishop of Exeter, [1905] 2 Ch. 455, refd to. [para. 37].

Waterous Engine Works Co. v. McLean (1885), 2 Man. L.R. 279, consd. [para. 42].

Simmons v. Westwood Apartments Company, 261 N.Y.S.(2d) 736; affd. 271 N.Y.S.(2d) 731; 221 N.E.(2d) 811; 275 N.Y.S.(2d) 271, consd. [para. 45].

First Trust Co. v. Airedale Ranch and Cattle Co., 286 N.W. 766 (1939), consd. [para. 46].

Sanderson v. Symonds (1819), B. & B. 426; 129 E.R. 786, refd to. [para. 49].

Davidson v. Cooper (1843), 13 M. & W. 342; 153 E.R. 142, refd to. [para. 49].

Gardner v. Walsh (1855), 5 E. & B. 83; 119 E.R. 412, consd. [para. 50].

Boulton v. Langmuir (1897), 24 O.A.R. 618, refd to. [para. 50].

Suffell v. Bank of England (1882), 9 Q.B. 555, refd to. [para. 50].

Koch v. Dicks, [1933] 1 K.B. 307, refd to. [para. 50].

Merchant's Bank v. Stirling (1880), 13 N.S. 439, refd to. [para. 52].

Boulton v. Langmuir (1897), 24 O.A.R. 618, refd to. [para. 52].

Authors and Works Noticed:

Williston on Contracts (3rd Ed.), vol. 15, s. 1901 [para. 11]; s. 1902 [para. 11].

Corpus Juris Secundum, vol. 3A, p. 291, s. 27 [para. 12]; para. 67 [para. 43].

Counsel:

Eugene J. Mockler, for the appellant;

David T. Hashey, Q.C., and Richard Scott, for the respondent.

This appeal was heard before HUGHES, C.J.N.B., RICHARD and LA FOREST, JJ.A., of the New Brunswick Court of Appeal on September 15, 1981. The decision of the Court of Appeal was delivered on May 6, 1982, when the following opinions were filed:

HUGHES, C.J.N.B. - see paragraphs 1 to 19;

RICHARD, J.A. - see paragraphs 20 to 21;

LA FOREST, J.A. - see paragraphs 22 to 54.

Please note that a French translation appears below the English language judgment.