Cynthia L. Spry

The appellant corporation granted a guarantee and collateral mortgage to the respondent law firm to secure over $800,000 in unpaid legal fees owed by the appellant and related companies.

The appellant sought to rescind the guarantee, arguing its owner lacked authority and the law firm failed to recommend independent legal advice.

The Court of Appeal upheld the application judge's dismissal, finding that while the law firm breached the Rules of Professional Conduct by not recommending independent legal advice, the security remained enforceable because the transaction was fair, the client was sophisticated, and no advantage was taken.

Sunrise REIT initiated an auction process to sell its assets, requiring interested parties, including Ventas and HCPI, to sign confidentiality and standstill agreements.

Ventas submitted the winning bid, and Sunrise signed a purchase agreement containing a 'fiduciary out' clause allowing it to consider superior unsolicited proposals, but also requiring it to enforce existing standstill agreements.

HCPI subsequently submitted a higher bid.

The Court of Appeal upheld the application judge's ruling that the purchase agreement obliged Sunrise to enforce HCPI's standstill agreement, thereby precluding Sunrise from considering HCPI's bid, as it was not a 'bona fide' proposal due to the breach of the standstill agreement.