Mesrie v. La Banque pour le Commerce Suisse-Israélien et al., [1973] SCR 702

Supreme Court of Canada

Mesrie v. La Banque pour le Commerce Suisse-Israélien et al., [1973] S.C.R. 702

Date: 1972-03-30

Jemil Mesrie (Defendant) Appellant;

and

La Banque pour le commerce Suisse-Israelien (Plaintiff) and Beaver Investments Ltd. (Mise‑en-cause) Respondents.

1972: February 22; 1972: March 30.

Present: Fauteux C.J. and Abbott, Ritchie, Hall and Pigeon JJ.

ON APPEAL FROM THE COURT OF QUEEN’S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC

Loan—Mortgage—Judgment by default—Proof by affidavit admissible—Leading questions—Proof by testimony—Document included in the case printed for Supreme Court—Code of Civil procedure, art. 194 and 306.—Supreme Court Act. R.S.C. 1970, c. S-19, s. 67.

The plaintiff obtained judgment against defendant by default to appear in an action based on a loan of money with conclusions for a declaration of hypothecation based on an authentic deed signed with the mise-en-cause as the declared representative of the Bank. A witness was heard before judgment was rendered. The defendant appealed from this judgment on the ground that the evidence was illegal and insufficient and that the judgment was obtained for an amount greater than the actual debt. The Court of Appeal affirmed the judgment of the Superior Court. Hence the appeal to this Court.

Held: The appeal should be allowed only to the extent of reducing the condemnation.

This is a case where, under art. 194 C.C.P. the prothonotary could render judgment upon an affidavit and the deed on which the action is based. Consequently, oral evidence before a judge could not be invalidated by leading questions although these are generally prohibited by art. 306.

The above comments apply to dispose of the ground that the evidence as to the rate of interest and accounting costs was insufficient. A deed of hypothec in the record, in which the defendant acknowledged an indebtedness and granted an additional hypothec, allowed proof of the exact amount of the debt to be made by testimony.

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There is, however, no valid reason for not taking into consideration the statement of account sent to the defendant by the plaintiff which was included in the case printed, with the agreement of the parties, under s. 67 of the Supreme Court Act. But, if the defendant chooses to rely on it, he must take it as a whole, debits as well as credits. Taking it as such, this document sets the balance owing by defendant at an amount lower than the amount for which judgment was obtained and with interest from a different date.

Even if the plaintiff has additional claims against the defendant, this could not justify the institution of an action without giving credit for all payments received from the defendant. But the latter was in no way justified in failing to tender what he acknowledged as due. For this reason he should not be awarded costs on this appeal.

APPEAL from a judgment of the Court of Queen’s Bench, Appeal Side, Province of Quebec, affirming a judgment of the Superior Court. Appeal allowed in part.

P. Mendell, for the defendant, appellant.

B. Reis, for the plaintiff and the mise-en-cause, respondents.

The judgment of the Court was delivered by

PIGEON J.—This is an appeal from a decision affirming a judgment rendered by default against appellant Mesrie in favour of the respondent Bank. The action, which is based on a loan of money, was instituted on April 9, 1969, for the sum of $158,152.06, with interest at 9% from January 1. There were in addition conclusions for a declaration of hypothecation, based on an authentic deed signed with the mise-en-cause as the declared representative of the Bank. Service upon Mesrie was made by publication of notices in newspapers. Default to appear was recorded. The case was then inscribed for judgment by the Court. The inscription was accompanied by an affidavit attesting that the amount claimed was owing. In addition, one witness was heard before judgment was rendered on July 14, 1969, for the amount claimed. On October 21, Mesrie made a motion to have the judgment revoked. On Octo-

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ber 28, this motion was dismissed by a judgment of the Superior Court on the grounds that it was not proved that it had been, in fact, impossible for the petitioner to file it within fifteen days from the day when he had acquired knowledge of the judgment. In the interval, that is on October 24, an inscription in appeal was filed, and judgment was not rendered by the Court of Appeal until March 26, 1971.

The first ground put forward by appellant is the illegality of the evidence. This illegality would result from the fact that, contrary to art. 306 of the Code of Civil Procedure, all questions to the witness were put so as to suggest the desired answer. This ground cannot be accepted. This is a case where, under art. 194 C.C.P. the prothonotary could render judgment upon inspection of an affidavit and of the document on which the action is based. Appellant’s counsel did not deny this, but he contended that because the case had been inscribed before the Court and not before the prothonotary, more was needed. This contention must certainly be rejected, because, if before the prothonotary an affidavit prepared in advance is sufficient, a judge cannot be expected to require more. As an example of a disallowance of evidence adduced by leading questions in a case by default, we were referred to the judgment delivered by the Superior Court in Stenger v. Alexander[1]. That was a case of separation from bed and board, in which obviously evidence by mere affidavit would be inadmissible. This of itself makes that decision inapplicable. As to Schwersenski v. Vineberg[2], cited by respondent, it could not apply to proof which is not adduced in the presence of the opposing party. Here proof could be adduced by simple affidavit and necessarily it was not subject to a requirement which applies only to facts susceptible of argument.

The above comments suffice to dispose of the second ground put forward by the appellant, namely that the evidence is insufficient because

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it allegedly does not show how the rate of interest on the debt was arrived at, why it was raised from eight to nine percent, or on what basis a commission of one half percent is payable, as well as certain accounting costs. Furthermore, in the deed of hypothec in the record, appellant acknowledged an indebtedness of $150,000, and granted an additional hypothec of $30,000 to guarantee accessories. This unquestionably allowed proof of the exact amount of the debt to be made by testimony, and as the case was judged by default such proof could be made by affidavit.

The final ground put forward is that the judgment was obtained for an amount greater than the actual debt, because the Bank has not allowed for two payments totalling U.S. $17,996. Indeed, there is in the record a statement of account as of March 31, 1969, sent to appellant by the Bank, in which credits for this total amount are shown dated January 10 and February 28. This official statement bears the following note:

[TRANSLATION] Below is a statement of the entries in your account; please check these as to accuracy. Unless any claims are received by us within one month we shall consider the account as definitely approved.

Counsel for the Bank did not question the authenticity of this document at the hearing. The only argument which he raised in opposition was the contention that as the document was filed in the Superior Court with the motion in revocation, it does not really form part of the record, because this motion was dismissed by a judgment from which there has been no appeal. The reasons for the decision of the Court of Appeal admit this line of reasoning. However, it must be considered that the document is included in the case printed with the agreement of the parties, under s. 67 of the Supreme Court Act, which reads as follows:

67. The appeal shall be upon a case to be stated by the parties, or, in the event of difference, to be settled by the court appealed from, or a judge thereof, and the case shall set forth the judgment objected to and so much of the pleadings, evidence, affidavits and documents as is necessary to raise the question for

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the decision of the Court; but the Court may, in its discretion, on special grounds, and by special leave, receive further evidence upon any question of fact, such evidence to be taken in the manner authorized by this Act, either by oral examination in Court, by affidavit, or by deposition, as the Court may direct.

It may be seen that this provision enables this Court to receive additional evidence. It is a power which is only used very rarely, but if the parties agree to introduce a decisive document, the Court will take it into consideration, as it recently did in Ryan v. Smith[3]. Here the parties have agreed to include the document in the printed case upon which this appeal must be decided, and this consent was given without reservation. There is therefore no valid reason for not taking the document into consideration. However, appellant may not use only what is to his advantage: the credit entries. If he chooses to rely on it, he must take it as a whole, debits as well as credits. Taking it as such, it sets the balance owing by appellant at $140,009.80, with interest at nine per cent from the closing of accounts on March 31, 1969, that is only a few days before proceedings were instituted. Converted to Canadian dollars at the rate implied by the calculation of the amount claimed in the action, this amounts to the sum of $149,985.85, which should be substituted for the sum $158,152.06 for which judgment was given. Further, interest should accrue at nine per cent from April 1, 1969, instead of January 1.

It should be noted that at the hearing counsel for the Bank stated that the latter had certain sums to set off in compensation against the payments. Pressed to explain what was involved, he mentioned payments of taxes on the hypothecated property. This clearly is not a case of compensation, but of additional claims which cannot be taken into consideration in this case, and as to which the Bank retains all the rights it may have. Even if it has such claims,

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this could not justify its instituting an action without giving credit for all payments which it had received. On the other hand, the appellant was in no way justified in failing to tender what he acknowledged as due, or to confess judgment for this amount. For this reason he should not be awarded costs on this appeal, nor should previous costs against him be modified.

I would allow the appeal without costs, only to the extent of reducing the amount of the judgment to $149,985.85 with interest at nine per cent from April 1, 1969.

Appeal allowed in part without costs.

Solicitors for the defendant, appellant: Phillips, Vineberg, Goodman, Phillips & Rothman, Montreal.

Solicitors for the plaintiff and the Mise-en-cause, respondents: Chait, Salomon, Gelber, Reis & Bronstein, Montreal.