The moving defendants sought summary dismissal of an action to enforce personal guarantees associated with a corporate loan secured by pledged shares.
The lender had seized and retained the pledged shares following default and asserted rights as shareholder rather than selling the collateral.
The court found that the lender elected to retain the shares “in satisfaction of the debt,” thereby extinguishing the underlying obligation and releasing the guarantors.
In the alternative, the lender’s conduct in refusing a reasonable purchase offer, delaying enforcement, and materially altering the risk without notice discharged the guarantors.
Although the limitation defence failed because the guarantee was a demand obligation and the limitation period began only upon demand, the action against the guarantors was dismissed on the other grounds.
