Sarah Turgeon

The plaintiffs, shareholders in several real estate corporations, sought leave to commence a derivative action and amended their statement of claim to add new causes of action following the discovery of a multi-million dollar fraud by a co-investor.

The defendants moved to strike the new claims and opposed the derivative action.

The court held that the motion for leave to commence a derivative action was statute-barred under the Limitations Act, 2002, applying the Supreme Court's reasoning in CIBC v. Green regarding the unavailability of nunc pro tunc orders to circumvent expired limitation periods.

The court also struck the new claims for breach of contract, breach of fiduciary duty, and negligence as statute-barred, but allowed the unjust enrichment and oppression claims to proceed.

The respondents sold trademarks and a customer base to a corporation under a purchase agreement, with the purchase price payable by post-dated cheques.

The appellant, the sole director of the corporation, signed the agreement personally under a clause requiring him to cover any bounced cheques.

After the corporation went into receivership and cheques bounced, the respondents obtained partial summary judgment against the appellant on the personal guarantee.

The appellant appealed, arguing inadequate reasons, lack of a liability finding against the corporation, and that the clause was not a guarantee.

The Court of Appeal dismissed the appeal, finding the reasons adequate, noting a guarantee is enforceable even if the principal debtor is bankrupt, and concluding the clause clearly constituted a personal guarantee.