HSBC Bank Canada v. 1481396 Ontario Inc., 2023 ONCA 762

Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20231115 DOCKET: COA-23-CV-0261

Lauwers, Hourigan and Coroza JJ.A.

BETWEEN

HSBC Bank Canada Plaintiff (Respondent)

and

1481396 Ontario Inc., Henry Nasr, Keysar Nasr and Amal Nasr** Defendants (Appellants*)

Counsel: Marek Z. Tufman, for the appellants James P. E. Hardy, for the respondent

Heard: November 10, 2023

On appeal from the order of Justice William Black of the Superior Court of Justice, dated January 20, 2023, with reasons reported at 2023 ONSC 531.

Reasons for Decision

[1]

Overview

After hearing submissions from the parties, we dismissed the appeal, with reasons to follow. We now provide those reasons.

[2]

Background

The appellants – two brothers – operated a grocery store in Scarborough. The respondent bank provided them a loan for business financing, secured in part by a property held by one of the appellants (Keysar Nasr) in joint tenancy with his spouse (Amal Nasr). The appellants defaulted on their loan. The respondent sued to recover its losses. The appellants did not respond, and in 2009 default judgment was entered in the respondent’s favour. The appellants’ debts remain outstanding, and as of 2022, with interest, amounted to approximately $1,850,000.

3After the default judgment, Keysar transferred title to their property to Amal alone. In 2012, Amal arranged to sell the property. The respondent sought and obtained a certificate of pending litigation (CPL). As a result of the CPL and a subsequent arrangement, Amal sold the property, with half of the proceeds (approximately $600,000) being paid into trust. In 2014, Keysar and Amal sued the respondent for wrongful registration of the CPL. In 2018, the parties reached a settlement. In 2019, the parties executed a release for the 2012 and 2014 actions. In 2020, the appellants claimed that in executing the release, the respondent also released their claim to the 2009 default judgment. The respondents disagreed. Consequently, the appellants brought a motion to set aside the 2009 default judgment, on the basis of the 2019 release. The motion judge rejected this interpretation of the release. He concluded that the release functioned to dismiss the 2012 and 2014 actions but not the 2009 default judgment.

[4]

Analysis

The appellants argue that the motion judge erred in his interpretation of the release. We see no merit to this argument.

5As the motion judge properly noted, the words of the 2019 release “plainly do not refer to, or release, the 2009 Action or the Default Judgment.” We agree with the motion judge that if the release was intended to apply to the 2009 action and default judgment, it would at the very least had made reference to them. The appellants argue that the motion judge should have invoked the contra proferentem principle to interpret the release in their favour. However, contra proferentem only applies as a tool of last resort in the interpretation of a truly ambiguous contract: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at para. 51. The motion judge found that this release was not ambiguous, and we agree. Contra proferentem therefore cannot apply.

6The motion judge also did not err by refusing to find that by reciting the events leading to the 2009 action (and ultimately the default judgment) in their 2012 claim, the respondent had “asserted” those facts as part of the claim. We agree with the motion judge’s conclusion there was no claim being asserted because default judgment had already been obtained well before 2012. Accordingly, the release was not tethered to that claim and its subsequent default judgment.

7Finally, the motion judge quite properly considered the factual matrix for the release, including emails and phone calls between Mr. Tufman and previous counsel for the bank which, viewed objectively, would lead any reasonable observer to conclude that the release did not relate to the 2009 action or default judgment.

8In sum, we agree with the motion judge’s observation that “any reasonable and objective assessment of the mutual understanding of the parties cannot help but conclude that the Release was not intended to release the Default Judgment, and that the parties well understood that this was the case.” There is no basis to interfere with the motion judge’s decision.

[9]

Disposition

For these reasons, the appeal is dismissed. The appellants shall pay the costs of the appeal to the respondent, which we fix in the all-inclusive sum of $9,300.