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jeudi 2 avril 2015

Acting as “Prête-Nom” for a Debtor Does Not Automatically Render You Co-Debtor of a Loan

By Ashley Kandestin
Mitchell Gattuso


In Sarai c. Kaur, 2015 QCCS 1148, Mr. Sarai (the “Plaintiff”) lent $140,000 to Mr. Singh for an alleged five-year term without interest. Given that his bank had a 21-day freeze policy on deposits, Mr. Singh had the loaned money transferred to his mother’s bank account, Mrs. Kaur, in order to have quicker access to the money. Some 6 years later, the Plaintiff sued Mr. Singh and Mrs. Kaur, alleging that they should be held jointly and severally liable for the repayment of the $140,000 five-year term loan.

Granting Mrs. Kaur’s motion under 165 (4) of the Code of Civil Procedure, the Court dismissed the Plaintiff’s action against her, despite the finding that she may have acted as the “prête-nom” for her son. The Court noted that no legal relationship existed between Mrs. Kaur and the Plaintiff given the lack of evidence to the effect that Mrs. Kaur ever agreed to become a co-debtor with her son, or a surety for his indebtedness.

The Court concluded that Mr. Singh was the sole debtor of the loan, finding the Plaintiff’s allegation that Mr. Singh “told him that his mother would act as “prête-nom” of her son with respect to the loan” (para. 10) was insufficient to render Mrs. Kaur a co-debtor:

“[19] The Court finds, based on the allegations of Plaintiff’s Motion, that Mrs. Kaur never borrowed the funds as acknowledged by Plaintiff, who knew that she was only a “prête-nom” to enable her son to use her bank account in order to obtain quick access to the proceeds of his $140,000 loan.

[20] Under such particular circumstances, a “prête-nom” does not automatically become a debtor. The disclosed purpose of the “prête-nom” in this instance does not establish that Mrs. Kaur agreed to become a co-debtor of her son’s indebtedness.

[21] Did she become a surety for her son’s indebtedness? Absolutely not. Article 2335 of the Quebec Civil Code stipulates that “Suretyship is not presumed; it is effected only if it is express.”

The Court therefore had no hesitation in dismissing the Plaintiff’s claim, with costs, against Mrs. Kaur under article 165(4) CCP as it was unfounded in law, even if the facts alleged were true.


To read this decision in its entirety, click here.

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