DATE: 20000905

COURT OF APPEAL FOR ONTARIO

DOCKET: C33344

RE: THE BANK OF NOVA SCOTIA (Plaintiff) – and – 1241139 ONTARIO LIMITED, JAMES RODRIGUES AND PABLO PIGNALOSA (Defendants)

BEFORE: McMURTRY C.J.O., BORINS and FELDMAN JJ.A.

COUNSEL: Allen C. Gerstl

For the appellant

Darran R. Soskin

For the respondent

HEARD: August 17, 2000

On appeal from the judgment of Madam Justice Susan G. Himel dated November 24, 1999.

E N D O R S E M E N T

[1] The appellant, Rodrigues, appeals from the judgment of Himel J. which granted summary judgment in favour of the bank on three guarantees given by him.

[2] The defence raised on the first two guarantees, one for $50,000 and one for $35,000, was that the bank’s representative had made certain representations to the appellant when he signed the guarantees, first, that there would be another guarantor, and second, that the $35,000 security which the bank held in respect of a further $35,000 guarantee provided by a related company, would stand as security for the appellant’s $35,000 guarantee.

[3] We agree with the motions judge that these allegations do not raise a genuine issue for trial.

[4] The other person eventually did sign similar guarantees for the bank and the bank has obtained default judgment against him and is prepared to assign the judgment to the appellant. As such, the appellant has whatever benefit he would have had, even if the alleged representation was made, which is denied, and even if such representation were admitted as evidence at trial, which is unlikely as it contradicts the “entire agreement” clause contained in the guarantee form: Hawrish v. Bank of Montreal (1969), 1969 2 (SCC), 2 D.L.R. (3d) 600 (S.C.C.). We were advised, in any event, that the other guarantor is in bankruptcy.

[5] It is clear on the face of the documents that the $35,000 security held by the bank was in respect of the corporate guarantee given by the related company. Therefore the alleged representation by the bank’s representative, which is denied, that the security would stand for the appellant’s guarantee, is contradicted by the documents. In any event, the suggested representation makes no sense, as one fund of $35,000 cannot stand as security for two separate $35,000 guarantees.

[6] However, in respect of the third guarantee for $6,000, the affidavits do raise a genuine issue for trial. Both the bank’s representative and the appellant swear that that

guarantee was given in consideration of the bank extending Visa cards to certain employees of the appellant’s company. The appellant says that he understood that the guarantee related only to that debt. When he left the company, the Visa account had been paid in full. However, the bank sought to enforce the guarantee against the accounts receivable account of the company. In light of the fact that there is some agreement about the circumstances surrounding the $6,000 guarantee, which suggests that it may have been intended by both sides to have limited application, there appears to be a genuine issue for trial.

[7] The appeal is therefore allowed to the extent that the default judgment is amended to include enforcement of the $35,000 and the $50,000 guarantees, but not the $6,000 guarantee, the enforceability of which is left for trial.

[8] As success was divided, the costs of the appeal shall be in the cause of the trial.

“R. McMurtry C.J.O.”

“S. Borins J.A.”

“K. Feldman J.A.”