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GUARANTEES AND INDEMNITIES - Guarantee - Defences

Monday, December 17, 2018 @ 6:25 AM  


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Appeal by the guarantors from summary judgment in favour of the bank with respect to the debts owed by the husband’s business. The appellants were spouses. The wife was never an officer, director or shareholder of the husband’s business. The bank alleged the appellants had both executed a Guarantee in its favour for the debts and obligations of the husband’s business. The appellants argued they never intended to guarantee the loans of the husband’s business. The wife also owned a business of which she was a shareholder, director and officer and had executed a guarantee of the loan of her business. She indicated that the bank representative who had attended at her business with the guarantee documentation had misrepresented to her that the 2013 guarantee relied on by the bank in the present action was for the ongoing financing of her business. According to the wife, the bank representative did not discuss the option of obtaining independent legal advice prior to signing the guarantee for the liabilities of the husband’s business.

HELD: Appeal allowed in part. Summary judgment was set aside against the wife. There was a genuine issue for trial regarding the enforceability of the guarantee against the wife. The judge erred in failing to draw an adverse inference from the bank’s failure to lead evidence of a person having personal knowledge of the wife’s execution of the guarantee. The judge also misapprehended the wife’s submission against summary judgment and her evidence regarding the circumstances surrounding her execution of the guarantee, specifically her sworn assertion that the bank’s representative misrepresented the guarantee as one pertaining to her business. The wife did not say that she did not receive any explanation of the document but that she was told it was a guarantee which pertained to the husband’s business. There was no genuine issue requiring a trial in respect of claim against the husband.

Fontaine v. Royal Bank of Canada, [2018] N.B.J. No. 267, New Brunswick Court of Appeal, J.E. Drapeau C.J.N.B., K.A. Quigg and B.L. Baird JJ.A., November 15, 2018. Digest No. TLD-December172018002