Court and Parties

COURT OF APPEAL FOR ONTARIO DATE: 2022-02-04 DOCKET: C69325

Tulloch, Pardu and Harvison Young JJ.A.

BETWEEN

Devi Financial Inc. Moving Party (Respondent)

and

Everwood Place Ltd., Hyde Park Crossing Ltd. and Trevor Bond Responding Parties (Appellants)

Counsel: Rod R. Refcio and William T.J. Chapman, for the appellants Daniel K. Reason, for the respondent

Heard: January 14, 2022, by video conference

On appeal from the judgment of Justice Spencer Nicholson of the Superior Court of Justice, dated March 16, 2021.

Reasons for Decision

[1] The appellant Trevor Bond appeals from the summary judgment granted in favour of the respondent Devi Financial Inc. (“Devi”). The motion judge concluded that there was no genuine issue requiring a trial on the question of whether the appellant had personally guaranteed the mortgage debt lent by Devi.

[2] The corporate appellants defaulted on a mortgage given by them which was ostensibly guaranteed personally by the appellant Trevor Bond.

[3] The facts may be briefly stated. Everwood Place Ltd. (“Everwood”) and Hyde Park Crossing Ltd. (“Hyde Park”) are corporations that own two separate pieces of property in the City of London. Mr. Bond is the principal of both corporations and an experienced and successful businessman. The appellants Everwood and Hyde Park granted mortgages over the properties to secure financing in the amount of $2,650,000.

[4] The financing at issue in these proceedings replaced prior financing. In September 2018, Devi offered mortgage financing in respect of the two pieces of property. Devi agreed to lend $2,650,000 at an interest rate of 11% per annum over a one-year term ending in July 2019. As security for the loan, the respondent was to receive a first charge/mortgage over each piece of property.

[5] Devi required that Mr. Bond enter into a guarantee. In the course of the negotiations for the financing, he provided a financial disclosure statement to Devi which indicated that, as of the end of April 2018, he had a net worth of $16,415,000. Mr. Bond also executed a Guarantor’s Consent to Electronic Registration of Charge. The money was advanced, and the charge/mortgage was registered on September 17, 2018 for a one year term. The respondent was also granted a General Security Agreement, which was duly registered pursuant to the Personal Property Security Act, R.S.O. 1990, c. P.10 (“PPSA”).

[6] The parties subsequently agreed to an extension of the mortgage so that it would mature on January 25, 2020. The interest rate was increased to 12% per annum, calculated and payable monthly in the amount of $26,500.00 from and after July 25, 2019.

[7] The appellants fell into default of the loan very shortly after the parties reached the extension agreement. The respondent gave the appellants a number of opportunities to bring the loan into good standing but, while a few payments were ultimately made in the fall of 2019, no payments were made after November 4, 2019. As of November 25, 2019, the next payment was due.

[8] The respondent delivered a demand letter dated November 28, 2019, containing a statement of amounts necessary to bring the mortgage into good standing as of December 10, 2019, along with a Notice of Intention of Enforce Security under the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, dated November 28, 2019. A Notice of Sale under Charge/Mortgage was delivered to the appellants on December 11, 2019, giving them until January 22, 2020, to bring the mortgage into good standing.

The Issues

[9] The appellants raise three arguments on appeal. We would not give effect to any of them for the following reasons.

[10] First, they submit that the motion judge erred in granting summary judgment without resorting to the fact finding powers set out in r. 20 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, in relation to Mr. Bond’s position that he was signing the guarantee as agent for the corporations and not on his own behalf.

[11] It is common ground that the motion judge articulated the correct test governing the availability of summary judgment: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87.

[12] The appellants argue, however, that he erred in applying the test because in finding that Mr. Bond signed as personal guarantor in the face of his evidence that he thought he was signing as agent for his corporations, the motion judge was making a credibility finding that was unavailable given that he failed to rely on any of the fact finding powers under r. 20.

[13] We disagree. The documentation was clear that Mr. Bond was signing as a personal guarantor. The task facing the motion judge was the construction of the contractual documentation before him, including the loan agreements and the guarantee. Any objective interpretation of these documents gives rise to the conclusion that Mr. Bond signed as personal guarantor. There is no ambiguity that could give rise to the admissibility and relevance of Mr. Bond’s personal understanding: Arora v. Whirlpool Canada LP, 2013 ONCA 657, 118 O.R. (3d) 113, at para. 24.

[14] This is a matter of straightforward contract interpretation between sophisticated and represented parties. The grounds which could give rise to the relevance of Mr. Bond’s personal understanding of the documentation he signed, such as non est factum, misrepresentation, or unconscionability or unequal bargaining power were not pleaded. The motion judge correctly found that nothing in Mr. Bond’s affidavit or cross-examination could have made out any such defence. In addition, as the motion judge observed, leave to amend was not sought.

[15] In short, the motion judge’s conclusion that Mr. Bond was liable as a personal guarantor was driven by the law on contract interpretation and not by any credibility finding with respect to Mr. Bond.

[16] The appellants also submit that the motion judge erred in finding that the amount due to the respondent was $3,214,264.15 inclusive of interest.

[17] In particular, they argue that the motion judge erred in including a “bonus” of three months’ interest of $93,619.34 as a result of the fact that the 2018 mortgage was not discharged but rather extended.

[18] We see no error on the part of the motion judge. This too was a simple question of contractual interpretation. There was no ambiguity.

[19] On reviewing the respective commitment letters given in 2018 and then in 2019, it is clear that the two “bonuses” were to be triggered by different circumstances. The 2019 commitment letter provided that the mortgage could be prepaid if the chargor/mortgagor paid three months’ interest to the chargee/mortgagee. That did not occur in this case and so that bonus did not apply. The motion judge continued, however, to explain that the 2018 bonus provision as set out in the original Schedule did apply:

[75] …the bonus set out in the original Schedule is triggered (1) if the Charge\Mortgage is not discharged on its maturity, or (2) if it is not renewed or extended. The only sensible reading of these clauses…in my opinion, is that in the event that the defendants did not pay out the loan on its maturity date, or agree to extend it to a new maturity date, the bonus would be activated. Reading these two provisions together, to avoid the bonus the defendants had to discharge the mortgage on its maturity date.

[76] Thus, the bonus was not activated when the parties agreed to the extension in July of 2019. It was, however, triggered when the current extension ended and the mortgage was neither discharged, nor extended. In my opinion, the bonus is properly included in the amount owing to the plaintiff. That is what the parties agreed upon.

[20] Finally, the appellants submit that the motion judge erred in rejecting their argument that the respondent failed to provide adequate notice and that the power of sale was therefore not available to it.

[21] This submission also fails. The appellants had been in default of payment for more than 15 days when the Notice of Sale was sent to it on December 11, 2019. The Notice set out the amount outstanding and gave the chargor appellants until January 22, 2020, to pay the amounts set out. This was more than 35 days. The motion judge made no error in his interpretation of the standard clause, noting that it does not require 15 days’ notice but simply requires that, if the chargor is in default of making a payment for at least 15 days, 35 days’ notice can be given until the chargee will enter on and lease or sell the land.

Conclusion and Costs

[22] For these reasons, the appeal is dismissed.

[23] Given the terms of the contract, the respondent is entitled to its costs on a solicitor-client basis. Costs of the appeal are payable by the appellants to the respondent in the amount of $7,500 as claimed.

“M. Tulloch J.A.”

“G. Pardu J.A.”

“A. Harvison Young J.A.”