Court of Appeal for Ontario

Citation: Manufacturers and Traders Trust Company v. Amlinger, 2007 ONCA 373

Date: 20070516

Docket: C45993

Between:

Manufacturers and Traders Trust Company

Plaintiff (Respondent)

and

Patrick M. Amlinger, Peter J. Clarke and David Jarvis

Defendants (Appellants, Clarke and Jarvis)

Before: WEILER, FELDMAN and ROULEAU JJ.A.

Counsel:

Davis S. Ward for the respondent

Alan J. Lenczner, Q.C. and Usman Sheikh for the appellants

Heard: May 11, 2007

On appeal from the judgment of Justice Paul Perell of the Superior Court of Justice dated August 29, 2006.

ENDORSEMENT

[1] This is an appeal from the judgment of Perrell J. granting the respondent Manufacturers and Traders Trust Company summary judgment to enforce personal guarantees of the two respondents, Peter J. Clarke and David Jarvis as well as the personal guarantee of a third defendant, Patrick M. Amlinger. The guarantees were of a corporation in which they had an interest

[2] Before us, the appellants argue that prior to the execution of the guarantees the respondent did not disclose material facts to them. Whether this material non-disclosure occurred and whether it amounted to a misrepresentation were triable issues.

[3] According to the appellants, the critical matter that was not disclosed to them is the allegation that, after the respondent told Amlinger that it required the two appellants to guarantee the corporation’s debt, Amlinger offered to also sign a guarantee. The respondent had not asked for it and, on the motion acknowledged that this was not a common occurrence. It was also alleged that Amlinger and the respondent had agreed that the respondent would not enforce the guarantee against Amlinger in the case of a default by the debtor corporation or would limit its recovery against Amlinger to 10% of the debt. Amlinger’s interest in the debtor was 10%.

[4] The appellants argue that this arrangement between Amlinger and the respondent was a material commercially unusual circumstance and the failure to disclose amounted, on the case law, to a misrepresentation allowing the appellants to set aside the guarantee.

[5] This argument was not made before the motion judge. The motion judge did, however, find that:

There is no evidence that Manufacturers had the intent to deceive. There is no evidence that Manufacturers knew or ought to have known that Messrs. Clarke and Jarvis were signing a guarantee under false premises or some misapprehension.

The appellants did not direct the court to any evidence indicating that the respondent was aware or had reason to doubt that Amlinger had not shared all relevant information with the appellants. There is, therefore, no basis for ruling that the motion judge’s finding is wrong.

[6] Further, the appellants have not led any evidence that, in deciding to sign a guarantee, they relied on the fact that Amlinger had himself signed a guarantee nor did the appellants state that, had they been aware of the alleged agreement between the respondents and Amlinger, they would not have signed the guarantees. In our view, these two points are fatal to the appellants’ position on this appeal.

[7] This is not a case where the appellants signed an accommodation guarantee. Each of the two appellants had a forty-five per cent interest in the debtor company. Although they relied on Amlinger as the person responsible for the day to day management of the debtor company, the appellants had oversight responsibility as directors and were involved in the decision-making of the debtor.

[8] For these reasons, we dismiss the appeal with costs to the respondent fixed at $10,000.

“Karen M. Weiler J.A.”

“K. Feldman J.A.”

“Paul Rouleau J.A.”