The appellants guaranteed a loan made by the respondent to a retirement residence developer.
When the developer defaulted, the respondent sued the appellants on the guarantee and obtained summary judgment.
On appeal, the appellants argued they were released from liability because the loan terms were materially altered without their consent, specifically by converting the fixed-term loan to a demand loan and entering a forbearance agreement.
The Court of Appeal allowed the appeal, finding the motion judge failed to consider the totality of the evidence regarding material alterations and applied the incorrect test for prejudice.
The summary judgment was set aside and the matter referred to trial on the defences of material alteration and laches.