Business Development Bank of Canada v. Druckmann, 2015 ONSC 1517
COURT FILE NO.: CV-14-507942
DATE: 20150309
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Business Development Bank of Canada
Plaintiff
– and –
Johny Druckmann and Helena Ben-Dahan
Defendants
Miranda Spence, for the Plaintiff
Stacy Nichols, for the Defendant Johny Druckmann
HEARD: March 5, 2015
WHITAKER J.
[1] The Plaintiff, Business Development Bank of Canada (“BDC”), seeks judgment against the Defendant Johny Druckmann (“Druckmann”) in accordance with a guarantee entered into between BDC and Druckmann dated May 21, 2009 (the “Guarantee”). As a guarantor, Druckmann guaranteed the obligations of certain debtors to BDC up to a maximum of $1,665,535.28 plus interest and costs on a solicitor and client scale. Druckmann has executed a consent to judgment which was held in escrow. There has been a demand for payment and BDC says that this is a judgment on consent.
[2] The guarantee signed by Druckmann in paragraph 4(d):
“The bank may enter into agreement or accept any compromise that has the effect of diminishing or extinguishing the liability of the borrower to the bank for the value of the loan security or the value of anything mortgaged by it.”
[3] Further, in paragraph 4(g):
“The bank is not bound to seek recourse against the borrower before requiring payment from the guarantor and the bank may enforce its various remedies under this guarantee in the loan security or any part of it at any time, in any manner and in any order as the bank may choose.”
[4] And finally, in paragraph 4(h):
“The bank bears no duty to the guarantor in respect of the liquidation of anything mortgaged under the loan security and, without restricting the foregoing, it is under no duty to avoid waste of, to obtain a fair price for or to avoid neglect in the liquidation of anything mortgaged under the loan security.”
[5] At paragraph 6 headed “release”:
“If more than one person guarantees any obligations of the borrower or to the bank under this guarantee, or any other instrument, the bank may release any of those persons on any terms the bank chooses and each person executing this guarantee who has not been released shall remain liable to the bank under the guarantee as if the person so released had never guaranteed any of the obligations of the borrower.”
[6] These provisions operate to remove any other obligations that the bank may have to the guarantor dealing with the disposition of the property once it has been demanded.
[7] To the extent that the Respondents here argue that BDC was negligent or responsible for not achieving the anticipated return on the sale of the property, it is clear from the language of the guarantee that BDC does not have any duty of care with respect to the disposition of the property. Sub-paragraph 4(d) expressly contemplates such an agreement and provides BDC with the ability to enter into any agreement or accept any compromise that has the effect of dimishing the liability. In the decision of this Court in Toronto Dominion Bank v. 1737929 Ontario Inc., 2011 ONSC 5528 (Ont. S.C.J.) at paragraph 48 in discussing guarantee contracts, the court noted at 48:
“It has been held that where a guarantor signs a guarantee which includes clear provisions that release a Bank, as against a guarantor from the duty to realize on security held in a commercially reasonable manner pursuant to the Personal Property Security Act, the guarantor will be deemed to have given up its right thereafter to hold the Bank to that standard.”
And at paragraph 49:
“I am satisfied that the language of the guarantees waives any right of the defendants to pursue the plaintiff for breaches of any duty concerning their alleged failure to proceed in a commercially reasonable fashion on the sale of the secured assets.”
[8] In my view, the provisions of paragraph 4(d)(g)(h) apply in the manner described in the Toronto Dominion Bank case. I agree with the BDC’s calculation of the amounts owing under the guarantee, that being $738,150 with pre-judgment interest at the rate of BDC’s floating base rate plus 1.5% per annum from January 12, 2015 to date.
[9] The Plaintiff’s motion is granted with judgment for the Plaintiff in the amount which I have described above. I heard the parties’ submissions as to costs at the hearing. The Respondents shall pay costs to the Plaintiff in the amount of $20,000 inclusive of taxes and disbursements payable forthwith.
Whitaker J.
Released: March 9, 2015
COURT FILE NO.: CV-14-507942
DATE: 20150309
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Business Development Bank of Canada
Plaintiff
– and –
Johny Druckmann and Helena Ben-Dahan
Defendants
REASONS FOR JUDGMENT
Whitaker J.
Released: March 9, 2015