Does a lender have the right to pursue a claim against the lender itself?
Ontario, Canada
The following excerpt is from Central 1 Credit Union v. UM Financial Inc., 2012 ONSC 1893 (CanLII):
Counsel for MCC relies on the decision of Ground J. in 1239745 Ontario LTD v. Bank of America Canada, 1999 CarswellOnt. 2665 (S.C.J.) for the proposition that it would be “absurd and manifestly unfair” if a security agreement gives the lender the right, upon default, to pursue causes of action belonging to the debtor against the lender itself. To avoid the absurdity, the security agreement in question was held to apply only to causes of action against third parties and not the debtor.
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