ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-10-099723-SR
DATE: 2012-01-20

B E T W E E N:

Window City Industries Inc.

David A. Weisman, for the Plaintiff

Plaintiff

• and -

1496209 Ontario Inc. carrying on business as Designer’s Home Centre and Ken Herman

Acting in Person

Defendants

HEARD: November 30, 2011

REASONS FOR DECISION

EDWARDS J.

OVERVIEW

[ 1 ] This matter came before me on November 30, 2011, by way of a summary trial. As a preliminary issue, Mr. Wiseman advised that he would not be relying on the failure of the defendants to respond to a Request to Admit, particularly that part of the Request to Admit that would have deemed Mr. Herman to have admitted, not only authenticity of the document, but also the truth of the facts as set forth in paragraph 7, which provides:

A credit application dated January 14, 2004, was submitted to Window City signed by Ken Herman on behalf of the corporate defendant, and as guarantor of all the corporate defendants’ debts and liabilities. [My emphasis]

[ 2 ] Mr. Weisman, on behalf of the plaintiff, indicated that he would proceed on the basis of having the matter tried on its merits. As a preliminary matter, I note that paragraph 7 of the Request to Admit, as set forth above, references a credit application dated January 14, 200 4 , as opposed to the credit application that was before me which is dated in 200 9 .

[ 3 ] The thrust of the plaintiff’s evidence relates to a credit application that requests various details of the defendant, 1496209 Ontario Inc. (“1496209”) including banking information and references. There is no information in the credit application as it relates to Mr. Herman personally.

[ 4 ] The credit application concludes in small print as follows:

Terms of Credit

All payments will be made on their due date in accordance with the terms of sale, or Window City Industries Inc. may proceed to take any action necessary in the collection of monies due. The undersigned hereby recognizes and agrees to payment of service charges and interest of 1 1/2 % per month or 18% per annum calculated monthly and which may be assessed to any overdue balance on the account. As security for the credit terms herein the undersigned purchaser grants to Window City Industries Inc. a Purchase Money Security Interest in the merchandise together with a fixed, floating charge and security interest in the balance of all the personal property which is in or will be in the possession of the undersigned. The undersigned guarantees payment on demand to Window City Industries Inc. of all debts and liabilities, present and future at any time owing by the above named credit applicant, customer or company. The Undersigned further agrees to allow Window City Industries Inc. to conduct whatever Credit Investigation they feel is necessary on our company and the Owners named herein. [My emphasis]

[ 5 ] The plaintiff argues that the credit application on its face is not only a credit application but also a personal guarantee that was signed by Mr. Herman.

[ 6 ] Mr. Herman took the witness stand on his own behalf and stated that he did not understand that the document that he signed was a document that he was signing not only on behalf of 1496209, but also a document that would have legal ramifications for him personally, as a personal guarantor.

[ 7 ] I heard evidence from Mr. Sadr, who dealt personally with Mr. Herman at the time that the parties were entering into a business relationship. Mr. Sadr stated that he recalled a conversation with Mr. Herman in which he clearly recalls explaining to Mr. Herman that not only was he signing the credit application on his own behalf but also as a personal guarantor. Mr. Herman denied that this conversation ever took place. No documentation of any kind was presented by Mr. Sadr that confirmed this conversation. Given that the conversation took place nearly three years ago, I find it hard to accept that Mr. Sadr would have a personal recollection of that type of conversation in the absence of any notes to refresh his memory.

[ 8 ] The issue before me is whether or not the credit application which on its face purports to provide for a personal guarantee by Mr. Herman, is in fact just that, a personal guarantee of Mr. Herman.

[ 9 ] Mr. Herman acknowledges that the handwriting in the credit application is his own handwriting and that the information that is supplied relates to Designer’s Home Centre (“Designer’s”) and 1496209 as opposed to information about himself personally. Mr. Herman takes the position that the credit application does not seek banking or credit information about himself personally but rather, credit and banking information about Designer’s and 1496209. He argues that given that the information sought in the credit application relates to Designer’s and not to himself, he did not understand that he was signing a document which would have personal ramifications for him in the form of a personal guarantee.

[ 10 ] It is noteworthy that the signature line under the heading “Terms of Credit” which purports to provide for a personal guarantee provides for a signature of an “authorized signing officer and guarantor ” [my emphasis]. There is no provision in the signature line for the office that Mr. Herman held in the company.

[ 11 ] There is no dispute with respect to the evidence I heard that Mr. Herman was placed under any undue pressure when he completed the credit application nor did I hear any evidence that he would have had adequate time to review it prior to signing. There was no evidence before me that Mr. Herman did not read that part of the credit application under the heading “Terms of Credit”.

[ 12 ] I also note that in the signature section “authorized signing officer and guarantor”, Mr. Herman has printed his name and signed it in his personal capacity, without making any reference to the fact that he was signing it solely on behalf of the corporation. Simply put, there was nothing to suggest that Mr. Herman was signing the credit application solely on behalf of Designer’s and 1496209 as opposed to on behalf of himself and Designer’s.

[ 13 ] Mr. Herman is an educated individual who had adequate opportunity to review the credit application in its entirety including the terms of credit which provide for a personal guarantee. While I have difficulty with Mr. Sadr’s evidence that he explained to Mr. Herman the nature of the terms of credit including personal guarantee, I nonetheless have come to the conclusion that Mr. Herman signed the credit application recognizing that he was doing so not only as an authorized signing officer of Designer’s, but also as a guarantor. As such, the plaintiff is entitled to judgment against Mr. Herman in the amount of $30,084.50, together with interest as provided for in the Terms of Credit at the rate of 18 percent per annum on each of the unpaid invoices. If

the parties cannot agree upon the calculation with respect to the aforesaid interest, I may be spoken to. The plaintiff is also entitled to its costs, and in that regard, if the parties cannot agree upon costs I will entertain written submissions limited to two pages in length to be received by the court within 15 days from the receipt of these reasons.

Justice M. Edwards

Released: January 20, 2012