2017 QCCA 1468, 2017 QCCA 1468

136327 Canada inc. c. Canadian Asset Based Lending Enterprise (Cable) Inc. 2017 QCCA 1468 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-025273-152 (500-17-066955-116) MINUTES OF THE HEARING DATE: September 26, 2017 CORAM: THE HONOURABLE MARIE ST-PIERRE , J.A. MARK SCHRAGER , J.A. PATRICK HEALY , J.A. APPELLANT COUNSEL 136327 CANADA INC. URSULA BABIARZ Mtre HENRI SIMON (Simon & Associé

s) RESPONDENT COUNSEL CANADIAN ASSET BASED LENDING ENTERPRISE (CABLE) INC. Mtre TOMY MARKAKIS (De Louya Markakis) On appeal from a judgment rendered on April 13, 2015 by the Honourable Justice Pierre Labelle of the Superior Court, District of Montreal

DESCRIPTION : Loan Clerk: Claire Le Guerrier Courtroom: Antonio-Lamer HEARING 9:30 Commencement of the hearing. Identification of counsel. 9:33 Representations by Mtre Simon 10:32 End of representations by Mtre Simon 10:33 Suspension of hearing 10:38 Resumption of hearing 10:38 Representations by Mtre Markakis 10:48 End of representations by Mtre Markakis 10:49 Reply by Mtre Simon 10:54 End of reply by Mtre Simon 10:54 Suspension of hearing 10:56 Resumption of hearing 10:57 Conclusion of the hearing: By the Court: Judgment – see page 3. (

s) Clerk BY THE COURT JUDGMENT [ 1 ] This is an appeal from the judgment of the Superior Court, District of Montreal (the Honourable Pierre Labelle), rendered on April 13, 2015 condemning Appellants to pay Respondent $236,265.75 together with interest at the rate of 5% per annum from July 15, 2011. [ 2 ] In so doing, the judge refused to reduce the aforementioned balance of previous loans due by Appellants as borrower (136327 Canada inc.) and guarantor (Ms.

Babiarz), respectively, which had been consolidated in the promissory note signed on January 12, 2009 and confirmed in a forbearance agreement signed on July 1, 2010. It was argued that the rate of interest of 47% [1] should give rise to a finding of lesion and the nullity or reduction of Appellants’ obligations.

The judge concluded that Appellants failed to discharge the burden of proof to establish lesion: [41] Firstly, there is no evidence of the loan market and the interest applicable for Plaintiffs’ type of business and risk. [42] Secondly, Babiarz has given no particular reason to stop doing business with CIBC bank except that she ″didn’t like the new management″.

Moreover, there is no evidence of the bank market or of her efforts to negotiate loans with other banks. [43] Thirdly, Babiarz is an experienced businesswoman who borrowed money from CABLE 27 times from 2005 to 2008 and instituted the present proceeding in 2011 only. [44] Fourthly, Plaintiffs had the opportunity to prepay the debt at anytime without penalty.

[45] In view of the Court, Plaintiffs proceeded in such a way because they found advantages or because the market imposed these conditions. [Reference omitted] It could be argued from personal Appellant’s testimony (the credibility of which was impugned by the judge) that it was “very difficult to obtain financing for this type of business” (a high-end women’s apparel store), that a chartered bank had asked for “100% guarantees”, would only advance 20% of the value of inventory and had, in any event, expressed preference for Appellants to seek financing elsewhere.

Moreover, her testimony indicates that she was required to pay European suppliers prior to arrival of garments in Canada – i.e. prior to the physical presence in Quebec of a potential lender’s collateral. All of the foregoing underscores Appellant’s own observation that the loans were high risk. [ 3 ]

Article 2332 C.C.Q. provides the possibility for the courts to rebalance the obligations of lenders and borrowers based on a finding of lesion. The presumption of the existence of lesion arises only where there is “a serious disproportion between the prestations of the parties” (Article 1406 C.C.Q. ). Any such disproportion cannot be inferred from the interest rate alone. Evidence must be adduced of relevant factors such as a comparison of rates charged by other lenders for a comparative loan [2] as the judge correctly noted.

Simply proving the prime rate of the Bank of Canada or of a chartered bank as the Appellants did, is not sufficient. What rate was charged for comparative high risk loans? The record is silent and the expert’s report on the subject mentioned by Appellants in the joint declaration of readiness never materialized. [ 4 ] The judge’s findings were correct. Given the conclusion of the absence of lesion it is not necessary to decide whether Appellants’ claim for reimbursement of interest payments is prescribed. FOR THESE REASONS, THE COURT : [ 5 ] DISMISSES the appeal with legal costs. MARIE ST-PIERRE, J.A.

MARK SCHRAGER, J.A. PATRICK HEALY, J.A.