The appeal concerned whether guarantors could rely on an improvident sale defence despite guarantee language permitting the secured creditor to deal with securities as it saw fit.
The court held that clauses purporting to eliminate guarantors' rights must be clearly worded, and ambiguous broad-form guarantee language is construed against the drafting creditor.
In light of the creditor's conceded improvident sale and the requirement under Part V of the Personal Property Security Act that the secured assets be disposed of in a commercially reasonable manner as against the principal debtor, the guarantors were not barred from advancing the defence.
The summary judgment against the guarantors was set aside and the bank's motion was dismissed.
