Gray v. Cameron et al.

Gray v. Cameron et al.

The written covenant to relieve the respondents from their guarantee within sixty days constituted a binding, unconditional obligation separate from the indemnity clause, and equity could decree specific performance because damages would be inadequate and the covenant could be implemented in various ways; accordingly the Court of Appeal's order enforcing specific performance was proper and the appeal is dismissed.

Citation
[1950] SCR 401
Parties
Appellant / Defendant: J.J. Gray; Respondent / Plaintiff: J.D. Cameron; Respondent / Plaintiff: A.L. Ainsworth; Respondent / Plaintiff: Henry Armstrong
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
13 March 1950
Procedural Posture
Contract (guarantee / Indemnity) / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario (on Appeal From Trial Judgment)
Outcome
Appeal dismissed with costs; judgment of the Court of Appeal for Ontario affirmed (majority) with partial dissent as to power to order specific performance directing payment/security
Legal Topics
Guarantee, Indemnity, Specific Performance, Adequacy of Damages, Premature Claim, Third‑party Payment Covenant
Source Language
English
Contract Equity Suretyship/guarantee Remedies Guarantee Indemnity Specific Performance Adequacy of Damages +2 more

Case Brief

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Parties

J.J. Gray

Appellant / Defendant

J.D. Cameron

Respondent / Plaintiff

A.L. Ainsworth

Respondent / Plaintiff

Henry Armstrong

Respondent / Plaintiff

Procedural Posture

Contract (guarantee / Indemnity) / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario (on Appeal From Trial Judgment)

Legal Issues

  1. 1 Whether a covenant by a third party to relieve guarantors of a bank loan within a specified time is enforceable in absence of demand by the bank
  2. 2 Whether specific performance can be granted of a covenant which effectively requires payment to a third party or arrangements with a non‑party bank
  3. 3 Whether claim for indemnity was premature in absence of demand or payment by guarantors

Ratio Decidendi

The written covenant to relieve the respondents from their guarantee within sixty days constituted a binding, unconditional obligation separate from the indemnity clause, and equity could decree specific performance because damages would be inadequate and the covenant could be implemented in various ways; accordingly the Court of Appeal's order enforcing specific performance was proper and the appeal is dismissed.

Court Disposition

Appeal dismissed with costs; judgment of the Court of Appeal for Ontario affirmed (majority) with partial dissent as to power to order specific performance directing payment/security

Orders

  • Appeal dismissed with costs
  • Order of the Court of Appeal granting specific performance of the covenant to relieve respondents from their guarantee within sixty days affirmed (as to majority opinion)