



COURT OF APPEAL FOR ONTARIO

CITATION: Healthy Lifestyle Medical Group Inc. v. Chand
    Morningside Plaza Inc., 2019 ONCA 6

DATE: 20190111

DOCKET: C65504, C65239 & M49809

Strathy C.J.O., Lauwers and Zarnett JJ.A.

BETWEEN

Healthy Lifestyle
    Medical Group Inc., Rochak Badhwar, Gore Doctors Medical Inc.,
Ashok Badhwar
,
Usha Badhwar
, Aash Karia, Bindaas Capital Inc., and Marvin Talsky

Appellants

and

Chand Morningside Plaza Inc., and Joshi Group of
    Companies Ltd.

Respondents

and

Mark Klaiman and Jeb
    Assaf

Intervenors

Paul Robson and Karanpaul Randhawa, for the appellants

Jonathan L. Rosenstein, for the respondents

Scott Hutchison and Lauren Mills Taylor, for the
    intervenors

Heard: December 20, 2018

On appeal from the
    judgment of Justice A. Pollak of the Superior Court of Justice, dated January
    3, 2017.

REASONS FOR DECISION

[1]

The appellants, Ashok Badwar and Usha Badhwar, are Rochak Badhwars parents.
    At his request, they signed a guarantee in favour of the respondents,
    guaranteeing the debts of Healthy Lifestyle Medical Group Inc. in the principal
    sum of about $607,000.

[2]

The motion judge granted summary judgment in favour of the respondents
    against the appellants in the amount of $954,842.55. If the judgment stands,
    the appellants will lose their house.

[3]

The appeal turns largely upon whether the motion judge was right to
    refuse to consider a defence she observed was potentially a genuine issue for
    trial  that there was no consideration for the guarantee because it was signed
    after the loan to Healthy Lifestyles had been advanced  because in her view
    the defence was not pleaded. The motion judge stated, at para. 13:

The Badhwars did not plead the defence of no consideration
    because the Guarantee was signed after the loan monies were advanced in their
    defence. They specifically plead that there was no consideration because they
    personally did not benefit from the Guarantee. They did not ask to amend the
    Statement of Defence at the hearing of this motion to include the above-noted
    defence. The Plaintiffs submit that they would have adduced further evidence
    had such a pleading been made in the Statement of Defence and that it would
    therefore be prejudicial and improper for this Court to consider the defence of
    no consideration because the Guarantee was signed after the loan monies were
    advanced. I agree that
in the absence of a motion to
    amend pleadings, which the Defendant could have made at the hearing of this
    motion but did not, the Court has no option but to find that this defence
    cannot be considered on this motion even though had it been properly pleaded,
    it could have potentially established a genuine issue requiring a trial on this
    motion
. [Emphasis added.]

[4]

It was common ground on the appeal that although the original statement
    of defence did not refer to a no consideration defence, what was before the
    motion judge was a fresh as amended statement of defence, which provided:

6. These Defendants admit that the signatures contained on the
    Guarantee, Promissory Note and Charge/Mortgage and Acknowledgement produced to
    them in connection with the litigation (collectively, the Documents) are
    theirs. These Defendants understanding, at all material times, was that they
    were guaranteeing the obligations of their son, the Defendant Rochak Badhwar
    (their son or Rochak). They were aware that their son had entered into
    business ventures involving multidisciplinary health care centres in Scarborough
    and Brampton.



8. These Defendants were not given an explanation for why they
    themselves were required to sign a Promissory Note.
They
    received no monies or monetary benefit by signing same and received no
    consideration in return for their having executed any of the Documents
.
    These Defendants were not and have never been directors, officers,
    shareholders, employees, agents, creditors or otherwise of their sons
    corporations.
They had nothing to gain by signing the
    Documents and did so gratuitously, out of natural love and affection
.
    (Emphasis added.)

9. These Defendants were presented with the Documents for the
    first time on October 7, 2010. Their signatures were hurriedly taken. The
    Documents were not explained to them. They met with a solicitor, Amritpal Singh
    Mann, at the offices of the Plaintiffs solicitor, Jagmohan Singh Nanda. They
    believed that Mr. Mann worked for or with Mr. Nanda. Mr. Nanda himself met with
    them, briefly, and provided them with a brochure entitled Homeowners Insurance,
    published by the Co-Operators. Mr. Nanda (not Mr. Mann) telephoned, on their
    behalf, the Co-Operators insurance representative and, as such, influenced or
    participated in the process of their renewing their insurance. These Defendants
    state that the advice they received from Mr. Mann was not independent or not
    truly independent and was, instead, a mere formality and given in a perfunctory
    manner. These Defendants plead and rely on the doctrine of
non est factum
and state that the Documents were signed under duress. These Defendants never
    received a reporting letter or invoice from Mr. Mann.

10. The Documents themselves, while signed on October 7, 2010,
    bear different dates. The Promissory Note and Guarantee are both dated October
    1, 2010.



15. These Defendants state, in any event, that there is
    sufficient equity in the Morningside Properties, that the Plaintiffs have not
    taken steps or sufficient steps to realize on such equity and that, having
    regard to the existence of sufficient equity in the Morningside Properties, it
    would be unconscionable or inequitable for the Plaintiffs to continue their
    Power of Sale Proceedings against These Defendants. The Residence has a special
    and emotional significance to These Defendants. It is where they have lived for
    approximately 20 years and it is where their daughter will be married this
    summer or fall.
[1]


[5]

The intervenors are former counsel for the appellants, against whom the
    appellants make allegations of ineffective representation. Counsel argues that
    the amended statement of defence advanced two versions of the no
    consideration argument. The first is that, as noted in para. 8 of the amended
    statement of defence, the appellants received no monies or monetary benefit by
    signing same [the promissory note] and received no consideration in return for
    their having executed any of the Documents, but that they signed the documents
    gratuitously, out of natural love and affection.

[6]

The second, according to the intervenors, is the issue that past
    consideration is no consideration, since the amended statement of defence
    alleged in para. 9 that the signing of the documents by the appellants followed
    by several days the actual advance of the monies by the creditor to their son,
    facts from which that legal issue could be argued. This very point was made in
    the factum filed by the appellants motion counsel on the summary judgment
    motion and in the August 2016 affidavit of Ashok Badhwar that was also before
    the motion judge. The intervenors urge this court not to hold against the
    appellants the election made by their motion counsel not to request leave to
    amend because, in the context, counsel was faced with uncertainty about whether
    the motion judge would grant leave to amend and did not want to concede the
    argument to the other side that both aspects of a no consideration argument had
    already been alleged adequately.

[7]

As noted, the motion judge observed that the defence that past
    consideration is not valid consideration could have been a genuine issue for
    trial, but she refused to consider it. In our view she erred. The motion judge
    did not consider the principles by which a court assesses the adequacy of
    pleadings. In considering whether a pleading discloses a reasonable defence, a
    court is obliged to read the pleading generously to allow for drafting
    deficiencies, and if the defence has some chance of success, it must be
    permitted to proceed. A statement of defence is required to contain the
    material facts on which a party will rely. Here the facts on which the legal
    argument about consideration would be based were alleged.

[8]

Read generously, the amended statement of defence does plead the defence
    of no consideration on the two grounds noted above. Accordingly, the decision
    of the motion judge on the consideration issue cannot stand.

[9]

The motion judges analysis was sparse and perfunctory, and did not
    address the full scope of the defences raised. In
Baywood Homes Partnership
    v. Haditaghi
, 2014 ONCA 450, 120 O.R. (3d) 438, this court cautioned
    against partial summary judgment where it is possible that the trial judge will
    develop a fuller appreciation of the relationships and the transactional
    context than the motions judge which could risk inconsistent findings and
    substantive injustice para. 37; see also
Butera v. Chown, Cairns LLP
,
    2017 ONCA 783, 137 O.R. (3d) 561, and
Mason v. Perras Mongenais
, 2018
    ONCA 978. The respondent did not argue that if we disagreed with how the motion
    judge dealt with the pleading point we should preserve specific other parts of
    her decision.

[10]

In
    all the circumstances of this case, including the contentious issues of fact
    and law raised by the appellants, we allow the appeal, set aside the judgment
    and direct that the matter proceed to trial on all issues, without prejudice to
    the rights of the parties to file amended pleadings and to seek further relief
    under the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194. If the
    parties are unable to reach agreement respecting costs, then each may provide a
    written costs submission limited to 3 pages, within 10 days of the release of
    these reasons.

G.R.
    Strathy C.J.O.
P. Lauwers J.A.
B. Zarnett J.A.





[1]
In an interlocutory decision prior to the hearing of the appeal, Paciocco J.A.
    observed that the statement of defence made no mention of an absence of
    consideration. That comment was apparently based on the original statement of
    defence, the amended version having not been brought to his attention
.


