Hoon v. Bank of Nova Scotia

Hoon v. Bank of Nova Scotia

Majority: The bank had no intention of continuing to deal with the two companies as customers after obtaining the guarantees and by April 24, 1959 had effectively terminated the banker‑customer relationship; the May 12, 1959 arrangement merely obtained additional security and an agreement to postpone enforcement, not a bona fide fresh banking transaction constituting consideration for the guarantees; therefore consideration failed and the guarantees were unenforceable (ex.5 did not cure the failure).

Citation
[1966] SCR 405
Parties
Defendant/appellant: Nirmal Jit Singh Hoon; Plaintiff/respondent: The Bank of Nova Scotia
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
11 March 1966
Procedural Posture
Guarantee and Suretyship / Appeal to Supreme Court of Canada From the Court of Appeal for British Columbia
Outcome
Appeal allowed; judgment for the plaintiff set aside; action dismissed
Legal Topics
Failure of Consideration, Continuing Guarantee, Extension of Time, Banker's Duties and Discretion
Source Language
English
Guarantee and Suretyship Banking Law Contract Law Failure of Consideration Continuing Guarantee Extension of Time Banker's Duties and Discretion

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 3 Authorities cited 5 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Parties

Nirmal Jit Singh Hoon

Defendant/appellant

The Bank of Nova Scotia

Plaintiff/respondent

Procedural Posture

Guarantee and Suretyship / Appeal to Supreme Court of Canada From the Court of Appeal for British Columbia

Legal Issues

  1. 1 Whether the bank's conduct after obtaining the guarantees constituted a failure of the consideration recited in the guarantees
  2. 2 Whether the May 12, 1959 arrangement constituted a bona fide fresh transaction between bank and customers sufficient to supply consideration for the guarantees
  3. 3 Whether the appellant's May 8/12 letter acknowledging additional security 'in no way' affected his liability altered the result

Ratio Decidendi

Majority: The bank had no intention of continuing to deal with the two companies as customers after obtaining the guarantees and by April 24, 1959 had effectively terminated the banker‑customer relationship; the May 12, 1959 arrangement merely obtained additional security and an agreement to postpone enforcement, not a bona fide fresh banking transaction constituting consideration for the guarantees; therefore consideration failed and the guarantees were unenforceable (ex.5 did not cure the failure).

Court Disposition

Appeal allowed; judgment for the plaintiff set aside; action dismissed

Orders

  • Appeal allowed
  • Judgment of the Court of Appeal and trial court reversed on this issue