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Royal Bank of Canada v. Gill

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Angela Au

on 14 July 2015

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Transcript of Royal Bank of Canada v. Gill

Jaginder Singh Gill (Father) - Mr. Gill senior
no formal schooling: could not read, write, or speak in English.
worked as a logger and in sawmills and later became a berry farm owner.
at one stage he had accumulated a net worth of $474,000
Royal Bank of Canada
Mr. Gill senior:
customer of Royal Bank of Canada.
Summary of the Case
February 1981:
Mr. Gill junior wanted to borrow $87 000 from the bank to purchase four residential building lots.
Summary of the Case
April 15, 1981
Mr. Gill junior told his father to sign some forms so that he can get a reduced interest rate for his mortgage

Mr. Gill senior accompanied the son to the bank and signed the guarantee for $87,000.

“please amend interest rate to R.B.P plus 1.5%. It is our contention that with the added security protection of Mr. Gill senior's guarantee and the mortgage security of the lots this rate afforded would adequately reflect our risk."
Royal Bank of Canada v. Gill
By: Angela Au & Elena Guo
Avtar Singh Gill (Son) - Mr. Gill junior
can speak, write, and understand English.
worked as loan interviewer for a credit union for around four years and managed his father's berry farm.
familiar with the nature of guarantee and has some experience in investing and in securities.
"sophisticated young business person".


3. Defence of non est factum is not valid in this situation. The appellants had to satisfy the court that the document signed was fundamentally, radically or totally different from the one that he expected to sign.
Mr. Gill senior was careless in not obtaining a detailed explanation of what he was signing.
the document was not altered by the bank either.

Judges Decision
Supreme Court of British Columbia:

1. Signing of the guarantee was the result of the carelessness of both Mr. Gill junior and senior.

2.There was no misrepresentation to either the father or the son by any bank official.

3. Non est factum did not apply to their situation. The judges did not think that Mr. Gill senior did not know anything about the nature of the document.

Judges Reasoning:
1. Carelessness of both Mr. Gill junior and Mr. Gill senior.
there was carelessness when Mr.Gill junior failed to read the document and to explain to his father that it was a guarantee. Mr. Gill junior was too excited about the deal that he failed to explain the detailed content of the documents.
there was also carelessness on part of the father. He did not act reasonably and failed to ask his son to explain the document to him before he signed it.
Class Activity
Agree with the judge's decision:
Non est factum is not valid.
evidence does not support that the father thought he was signing something fundamentally different from what he has thought.
the father was careless in signing the document.
the father should have obtained some explanation from his son and questioned his son.
the father should have understood the nature of the document that it was a guarantee even though he could not speak English.
What is your opinion?
Thank you!
1. Who do you think is responsible in this case?

From the son’s evidence, he truthfully told his father what he was signing for. The father knew that the signature will benefit his son and the document was business related. If things went wrong, this would expose him to liability. Therefore, he have had a basic understanding of the nature of the document.
Mr. Gill junior:
borrowed from the Royal Bank of Canada before.
Loan was approved by the bank
Mr. Gill junior needed Mr. Gill senior to guarantee his mortgage so that he can receive a reduced mortgage interest rate.
Mr. Gill senior was out of Canada and was not there for the initial discussion of the loan.
Summary of the Case
April 15, 1981
Mr. Gill junior stated:
"I was so excited about this deal at that time... I said, you know, let's get the money and get on with it."
"...we were out of the bank in less than five minutes. No copies of any forms were given to my dad at that time or to myself".
forms were not requested by either of them.
September 23, 1982
the bank has made a formal demand for payment on the son and his wife. On the same day the bank made formal demand upon the father for payment, pursuant to the estate upon a guarantee.
June 2, 1984
death of Mr. Gill senior
at no time before his death raised a complaint that he did not understand what he was signing.

December 4, 1984
bank's petition was launched

Summary of the Case

1. Mr. Gill junior and senior was careless in executing a guarantee without considering all of the circumstances of the case.
Mr. Gill senior could not speak, read, or write English but he still signed the guarantee. He had faith in his son and would not question his son too much.

2. The bank was not careless in respect to the circumstances surrounding the execution of the guarantee.
the bank assumed that Mr. Gill senior had already understood the guarantee because of Mr. Gill junior was acting on his behalf.
Mr. Gill junior should have sufficient knowledge of the loan because he worked as a loan interviewer.
bank did not misrepresent any of the document
Justice LaForme in Beer v Beer
2. Do you think there was any misrepresentation in this case?
Mr. Gill senior was a customer of the bank in his own right. He was responsible for obtaining assistance from his son or others in understanding what he was signing.
Mr. Gill junior should be responsible for understanding the guarantee carefully and for explaining it to his father.
The bank also had responsibility considering the circumstance that the son was influenced by his emotion, and his father was an English illiterate person. They should make sure that their customer fully understands the document before signing it.
Class Activity
Mr. Gill junior did not explain to his father that he would have to sign his own personal guarantee for the reduced rate of interest for his son.
•Contract: an agreement between two or more parties to do a thing in exchange for something of value.

•Liability is imposed on a person who has not carried out what he has promised to do.

•Bilateral contract: involves two promises and the acceptance must be communicated for the contract to be completed.

• Forming a contract:
acceptance: agreement to the terms of the offer.
consideration: both sides giving each other value.
intention to form a contract.
capacity to enter into a contract.

Non est factum - "it is not my deed". A defense whose application is restricted to those circumstances where the person relying on it must show:
(1) they were not careless in signing, and
(2) the document signed was different from the one they thought they were signing
Non est factum
Judges Reasoning:
3. Defense of non est factum is not valid.
Mr. Gill senior was not signing a guarantee fundamentally different from what he has thought. His son truthfully told his father that his signature was required in order to get a reduced interest rate and that he had to sign along with him.
Mr. Gill senior must have known that he was signing a document of some business significance that will benefit his son. He was careless in signing the documents.
there is no misrepresentation from the bank
the son is acting on behalf of his father. He should have read and understood the document before signing it.
the son is a loan's interviewer therefore he should have had some experience with the guarantee.

Reasonable for the judge to dismiss the appeal.
Mr. Gill senior had faith in his son.
Judges Decision
British Columbia Court of Appeal:

the judges from the court of appeal agreed with the judge’s decision from the lower court.
they stated that non est factum defense is not valid. Mr. Gill senior must have known something about the nature of what he was signing and that it was of business significance.

Appeal was dismissed.

Summary of the case
went to Supreme court of British Columbia and then to court of appeal.
an appeal of a non est factum case

Do you think the non est factum is valid in this case
Judge's Reasoning
2. There was no misrepresentation from the bank officials therefore the bank was not responsible.
the contract was clearly shown to both Mr. Gill junior and Mr. Gill senior with no fraudulent statement (person making statement knows it is false and makes it intentionally).
Full transcript