



COURT OF APPEAL
    FOR ONTARIO

CITATION: Royal Bank of Canada v. Everest Group Inc., 2019
    ONCA 287

DATE: 20190409

DOCKET: C65894, C65893

Lauwers, Pardu and Nordheimer JJ.A.

BETWEEN

Royal Bank of Canada

Plaintiff (Respondent)

and

Everest Group Inc.,
    Yousaf Jamell Khan, Zarmina S. Khan and Shahid Saleem Khawaja

Defendants (Appellants)

AND BETWEEN

Royal Bank of Canada

Plaintiff (Respondent)

and

Versatile Holdings Inc.,
    Sardar Samiuddin Khan, Nida Shahid and Shaid Saleem Khawaja

Defendants (Appellants)

Daniel Hamson, for the appellants

Rachel Moses, for the respondent

Heard and released orally:  April 8, 2019

On appeal from the judgments of Justice Paul Perell of
    the Superior Court of Justice, dated August 23, 2018 with reasons reported at 2018
    ONSC 4973 and at 2018 ONSC 4971

REASONS FOR DECISION

[1]

The defendants appeal from the summary judgments granted by the motion
    judge.

[2]

The corporate appellants entered into franchise agreements to operate two
    restaurants. The respondent provided financing for these ventures. The
    individual appellants guaranteed the financing provided by the respondent.

[3]

Difficulties arose in the operation of the restaurants with the result
    that the corporate appellants sought to rescind their franchise agreements. 
    They alleged that the franchisor had failed to provide proper disclosure
    documents.  The corporate appellants demanded that the franchisor pay them the
    monies that they had lost in connection with purchasing and operating the
    franchises. In response to the rescission, the franchisor took over the
    operation of the restaurants.

[4]

The corporate appellants advised the respondent of these events. In
    response, the respondent demanded repayment of the amounts outstanding under
    the financing arrangements. The respondent alleged a number of events of
    default including that the corporate appellants had ceased to carry on business. 
    The corporate appellants did not repay the amounts due.

[5]

The respondent commenced an action to recover the amounts due.  The
    summary judgment motions followed. The motion judge granted summary judgment on
    the basis that there were events of default under the financing arrangements
    and that, consequently, the monies advanced had to be repaid.

[6]

The appellants submit that the motion judge erred in concluding that the
    corporate appellants had ceased to carry on business.  They contend that the
    business of the corporate appellants had merely changed from operating the
    restaurants to the business of recovering their investments in the franchises. 
    The motion judge rejected this contention as do we. We agree with the motion
    judge that the appellants position does not accord with business reality or
    with common sense. It was reasonable for the motion judge to conclude that the
    respondents ceased to carry on business when they returned the restaurant
    operations to the franchisor. It was also open to the motion judge to conclude
    that this conduct amounted to a material adverse change in the appellants
    operations.

[7]

Further, we see no merit in the submission that the respondent failed to
    exercise its discretion properly in demanding repayment of the loans.

[8]

Finally, we see no error in the motion judges refusal to grant the
    adjournment of the summary judgment motion. That decision falls entirely within
    the discretion of the motion judge.

[9]

In the end result, it is our view that the motion judge was correct in
    his conclusions.

Conclusion

[10]

The
    appeals are dismissed with costs to the respondent fixed in the amount of $17,000.00
    payable by the Everest defendants and $16,000.00 payable by the Versatile
    defendants, both inclusive of disbursements and HST.

P.
    Lauwers J.A.
G. Pardu J.A.

I.V.B. Nordheimer J.A.



