Court of Appeal for Ontario

Citation: Business Development Bank of Canada v. Almadi, 2016 ONCA 428 Date: 2016-06-01 Docket: C61411

Before: Doherty, Tulloch and Benotto JJ.A.

Between:

Business Development Bank of Canada Plaintiff (Respondent)

and

Joanne M. Almadi also known as Jo-Anne Almadi also known as Joanne Hill and Gordon M. Almadi also known as Gordon Almadi Defendants (Appellants)

Counsel: Brandon Jaffe, for the defendants (appellants) Sean N. Zeitz, for the plaintiff (respondent)

Heard and released orally: May 24, 2016

On appeal from the judgment of Justice Bale of the Superior Court of Justice, dated November 10, 2015, with reasons reported at 2015 ONSC 6912.

Endorsement

Issue #1 – Did the motion judge err in granting relief to the respondent under s. 95 of the Bankruptcy and Insolvency Act (“BIA”)?

[1] This submission mischaracterizes the motion judge’s reasons and the order he made. He was careful not to grant any relief under s. 95 of the BIA. Instead, he granted judgment to the respondent on the guarantee.

[2] In coming to that conclusion, the motion judge made two important findings of fact:

• The respondent took payment on the debt from the primary debtor based on the misrepresentation by the guarantor (Mr. Almadi, the appellant) on behalf of the primary debtor that the primary debtor would be closing its business and paying all of its creditors (see reasons para. 22); and

• At the time of the payment to the respondent, the primary debtor was insolvent, rendering the payments a preference under s. 95 of the BIA (see reasons paras. 18-20).

[3] We see no basis upon which to interfere with either findings of fact. Those findings were available in the context of a summary judgment motion.

[4] On the facts as found by the motion judge, the respondent’s decision to effectively return the improper payment to RBC, which stood in the shoes of the Trustee who in turn stood in the shoes of the primary debtor, revived the guarantor’s obligation under the debt. To hold otherwise, would be to require a needless litigation in the context of the bankruptcy proceeding and, on the facts of this case, would allow the guarantors to shelter behind the misrepresentations made to the respondent by Mr. Almadi.

Issue #2 – Did the respondent fail to make demand on the guarantee as required by the terms of the guarantee?

[5] The motion judge did not make a finding whether the respondent’s demand complied with the terms of s. 7 of the guarantee. There was evidence going both ways on this point. The motion judge instead rejected this submission on the basis that any failure to make the formal demand as required by s. 7 caused no prejudice to the appellant (see paras. 25-27). In our view, it was open to the motion judge on the evidence to reject this submission on that basis: see Alberta Opportunity Co. v. Schinnour, 1990 ABCA 359, [1990] A.J. No. 1125 (Alta. C.A.), leave to appeal refused, [1991] S.C.C.A.

[6] The appeal is dismissed.

[7] We agree with the respondent’s submission that the respondent is entitled to substantial indemnity costs in light of para. 2 of the guarantee. Costs to the respondent on the appeal in the amount of $15,000, inclusive of disbursements and relevant taxes.

“Doherty J.A.”

“M. Tulloch J.A.”

“M.L. Benotto J.A.”