COURT OF APPEAL FOR ONTARIO
MacPherson, Gillese and van Rensburg JJ.A.
BETWEEN
Global Food Traders Inc. and Xela International Inc.
Plaintiffs (Respondents)
and
Fernando Massalin, Maria Massalin, Tifco Foods, Inc., 2091399 Ontario Inc. and Latinamerican Foods Inc.
Defendants (Appellant)
Elaine Peritz and Sarah Turgeon, for the appellant
Martin Mendelzon, for the respondents
Heard: May 19, 2015
On appeal from the judgment of Justice James M. Spence of the Superior Court of Justice, dated December 18, 2014.
ENDORSEMENT
1In April 2012, Global Food Traders (“GFT”) and Latinamerican Foods Inc. (“LAFI”) entered into a purchase agreement under which GFT sold its trademarks and customer base to LAFI for $500,000, payable by 50 post-dated cheques for $10,000 each (the “Agreement”).
2Mr. Massalin, the sole officer, director and controlling mind of LAFI, executed the Agreement on behalf of LAFI.
3Below the signatures of the parties to the Agreement, there is the following statement:
The undersigned is executing this Agreement solely in connection with his obligations as set forth in Section 1 of this Agreement.
4Mr. Massalin personally signed below this statement.
5The relevant part of section 1 of the Agreement can be found in its last two sentences, which read as follows:
The Purchase Price shall be payable in 50 equal monthly installments of $10,000 commencing April 30, 2012 by post-dated cheques. If Mr. Massalin’s obligations are called upon pursuant to this Section he shall within three days provide the Seller with immediately available funds to cover any bounced or NSF cheques. [Emphasis added.]
6GFT performed in accordance with the Agreement. However, after receiving $140,000, the balance of LAFI’s post-dated cheques were not honoured. GFT sued.
7LAFI is currently in receivership.
8At the motion below, there was no dispute raised as to LAFI’s failure to pay or the amount owing under the Agreement.
9By judgment dated Dec 8, 2014, GFT was granted partial summary judgment against Mr. Massalin. The motion judge found that the “guarantee” in para. 1 of the Agreement was valid and enforceable.
10Mr. Massalin appeals. He submits that:
the motion must be remitted for rehearing because the motion judge gave no reasons for decision;
the decision is flawed because the motion judge failed to make a finding of liability as against LAFI; and
the motion judge erred in finding that s. 1 of the Agreement constituted a guarantee.
11We do not agree.
12We reject the appellant’s submission that the motion judge’s reasons are inadequate. While brief, the reasons convey the reasoning below as to the meaning of s. 1.
13We see no merit in the appellant’s second submission. On the motion below, the appellant did not dispute the amounts which GFT stated LAFI owed under the Agreement. Moreover, we do not accept that without a finding of liability against LAFI, there can be no finding of liability on the personal guarantee and because LAFI is in receivership, there can be no finding of its liability absent leave of the court or consent of the receiver. A personal guarantee provides a contracting party with recourse if the principal debtor is unable to pay, even where the principal debtor goes bankrupt: Royal Building Supplies Ltd. v. Tabrco Management Ltd. et al, 2006 CarswellOnt 8900(S.C.), aff’d 2007 CarswellOnt 831 (C.A.) and Setanta Sports Na Ltd. v. Score Television Network Ltd., 2009 CanLII 41213 (Ont. S.C.).
14Finally, while the word “guarantee” is not used in section 1, it is clear from that section and underscored by the statement at the foot of the Agreement, that section 1 contains Mr. Massalin’s personal guarantee of LAFI’s payment obligations under the Agreement. Indeed, although Mr. Massalin baldly denies that section 1 contains a personal guarantee, he offers no other explanation for what meaning could be given to the last sentence of that section or for why he signed the Agreement in his personal capacity. While there is a lack of precision in the wording of section 1, there can be no misapprehension as to what the parties were agreeing to when they executed the Agreement. Mr. Massalin, the sole director, officer and controlling mind of LAFI, a closely held corporation, was providing his personal guarantee to pay any amounts required to cover LAFI’s “bounced” or NSF cheques under the Agreement.
15We note, as well, that the record shows that Mr. Massalin acknowledged his liability both before and after signing the Agreement in his personal capacity.
16Accordingly, the appeal is dismissed with costs to the respondent fixed at $6,930, all inclusive.
“J.C. MacPherson J.A.”
“E.E. Gillese J.A.”
“K. van Rensburg J.A.”
