|
Representation - Independent Legal Advice (ILA). Chand Morningside Plaza Inc. v. Healthy Lifestyle Medical Group Inc. [ILA]
In Chand Morningside Plaza Inc. v. Healthy Lifestyle Medical Group Inc. (Ont CA, 2026) the Ontario Court of Appeal allowed an appeal, here brought against "the dismissal of their collection action" seeking "payment of the amounts that remain owing under a guarantee and a mortgage".
Here the court considered issues of contractual 'undue influence', here in a loan-guarantee context and involving 'independent legal advice' (ILA):[45] The new defence related to the appellants’ actual or constructive knowledge of the inadequacy of the independent legal advice arose out of – but was materially different than – the question of the appellants’ knowledge, actual or constructive, concerning the pleaded defences of non est factum, duress, undue influence or unconscionability in the signing of guarantees, promissory notes or mortgages.
[46] It is well established that where a lender has actual or constructive knowledge of issues supporting the defence of undue influence in the signing of guarantees, promissory notes or mortgages, in order to protect against a claim that the instruments relied upon are vitiated, the lender must take reasonable steps to try to ensure that the persons signing the instruments understand the transaction and are entering into it freely: Bank of Montreal v. Duguid (2000), 2000 CanLII 5710 (ON CA), 47 O.R. (3d) 737 (C.A.), at para. 12, leave to appeal granted but appeal discontinued, [2000] S.C.C.A. No. 298. A lender may accomplish this by suggesting that the signers seek and obtain independent legal advice and a full explanation of the transaction: CIBC Mortgage Corp. v. Rowatt (2002), 2002 CanLII 45110 (ON CA), 61 O.R. (3d) 737 (C.A.), at para. 16, leave to appeal refused, [2002] S.C.C.A. No. 526; Bank of Montreal, at paras. 14-15; and JGB Collateral v. Rochon, 2020 ONCA 464, 151 O.R. (3d) 601, at para. 11. This is equally true in instances where a lender has actual or constructive knowledge of issues supporting the defences of non est factum, duress and unconscionability.
[47] However, any deficiencies in the independent legal advice are a matter between the lawyer who gives the advice and the clients who receive it, unless the lender knows or ought reasonably to have known of them. The lender is entitled to rely on a certificate of independent legal advice from a lawyer licensed to practice law in the jurisdiction, so long as the lender did not have any knowledge, direct or otherwise, that there is an issue of the authenticity or propriety of the independence of the legal advice: Royal Bank of Canada v. Biddell et al, 2015 ONSC 6535, 61 R.P.R. (5th) 62, at para. 75; Bertolo v. Bank of Montreal (1986), 1986 CanLII 150 (ON CA), 57 O.R. (2d) 577 (C.A.), at para. 7.
|
