COURT FILE NO.: CV-21-00001610
DATE: 20220127
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
The DeLong Co. Inc.
Plaintiff
– and –
Great Lakes Milling Company Inc. and Rayman Bedessee
Defendants
Jack Masterman, for the Plaintiff
Gerry Smits, for the Defendants
HEARD: January 19, 2022
REASONS FOR JUDGMENT
DI LUCA J.:
[1] This case involves a dispute over bushels of corn. The plaintiff, The DeLong Co., Inc. (“DeLong”) buys, stores and sells corn. Its customers are millers across the United States and internationally. The defendant, Great Lakes Milling Company Inc. (“Great Lakes”) is a miller, turning corn into corn flour, among other things. Mr. Bedessee is the owner/director of Great Lakes.
[2] DeLong and Great Lakes had a business arrangement for the purchase and sale of corn. The arrangement was backed by a personal guarantee executed by Mr. Bedessee. While the business arrangement was initially functional, it ultimately soured when Great Lakes fell behind on paying invoices.
[3] DeLong claims it is owed $242,546.99 USD by Great Lakes on account of past invoices. It further claims that this amount is owed jointly and severally by Mr. Bedessee given the personal guarantees.
[4] DeLong now brings a summary judgment motion arguing that a trial is not necessary to determine this dispute. Great Lakes agrees that it owes money though disputes the exact amount and the interest charges. Mr. Bedessee argues that a trial is required to determine the issue of the personal guarantee in this matter. In the alternative, Mr. Bedessee argues that this court should find that there was no personal guarantee or if there was, it was limited to $100,000.
[5] The following reasons explain why I agree with the plaintiffs. A trial is not required in order to fairly adjudicate this matter. The evidence clearly establishes that DeLong is owed $242,546.99 USD for corn supplied, plus interest of 1.5% per month (18% per annum) as set out in the contract and related invoices. The evidence also readily establishes that Mr. Bedessee signed a personal guarantee that was not limited to $100,000. As a result, I grant judgment on the full amount, jointly and severally as between the two defendants.
Overview of the Facts
[6] In March 2020, Great Lakes approached DeLong for the purpose of purchasing shell corn. An agreement was reached and DeLong began selling corn to Great Lakes at mutually agreed upon prices. In order to hedge against the risk of an increase in the price of corn, when DeLong sells physical corn, it also purchases corn futures contracts on its own account.
[7] The agreement to sell and purchase between DeLong and Great Lakes was the subject of a Credit Agreement. According to the terms of the Credit Agreement,
a. Great Lakes agreed to make payment in full for all product supplied by DeLong on or before the due date on invoices;
b. A finance charge of 1.5% per month (18% per annum) would be applied on outstanding amounts;
c. Great Lakes would be responsible for all expenses related to collection of accounts;
d. Mr. Bedessee jointly and severally guaranteed payment of Great Lakes’ indebtedness to DeLong;
[8] While corn sales proceeded without issue from March 2020 onward, by November 2020, Great Lakes fell into arrears on invoices. It appears that this occurred as a result of business difficulties related to the global COVID pandemic. By December 31, 2020, Great Lakes had an overdue account of $341,763, as set out in an Unpaid Invoices Report provided by DeLong.
[9] On January 12, 2021, a further 7,079.18 bushels of corn was shipped and invoiced accordingly. On January 14, 2021, Great Lakes made payments totalling $52,980 on account, leaving a large balance outstanding.
[10] On January 19, 2021, DeLong sent Great Lakes an up to date Unpaid Invoices Report and indicated that unless the amount owing was paid, no further shipments would be made. A representative of Great Lakes, Mr. Gatti, responded and indicated that Great Lakes was arranging for bank financing. He also indicated that Great Lakes had been paying an average of $40,000 to $50,000 per week and would be “current” in three to four weeks. Mr. Gatti did not dispute the amount owing.
[11] DeLong agreed to “finish the week”, in other words, provide the shipment that was scheduled for that week in exchange for a payment of $40,000-$50,000 and a Continuing Personal Guarantee from Mr. Bedessee.
[12] On January 20, 2021, a further 7.725.59 bushels of corn were shipped to Great Lakes. This corn had a value of $40,018.56.
[13] On January 21, 2021, Mr. Bedessee sent DeLong a Continuing Guarantee and a Personal Statement of Affairs providing his net worth. For reasons that are not entirely clear, this personal guarantee listed Bedessee Imports as the debtor. As well, Mr. Bedessee signed this guarantee in his capacity as a Director of Bedessee Imports and not in his personal capacity. On this same date, Great Lakes also made a further payment on account of $29,980.
[14] On January 22, 2021, Mr. Bedessee requested an updated statement of unpaid amounts and was advised that $258,803 was due and owing. No objection as to the amount was raised at this time.
[15] On February 11, 2021, Mr. Bedessee advised that the balance owing would be paid off in “about 7-10 days.” Again, he raised no issue as to the amount owing.
[16] On February 17, 2021, an updated unpaid Invoice Report was provided to Mr. Gatti. The amount owing was now $339,323.99 as a result of some additional shipments of corn and also a finance charge of $3,832.28 levied in accordance with the Credit Agreement. No concern was raised as to the amount shown as owing in this report.
[17] On February 24, 2021, DeLong spoke with Mr. Gatti about the amounts outstanding. In a follow up email, Mr. Gatti suggested that DeLong could sell the futures contracts that DeLong had purchased to hedge the price of the remaining physical grain it had contracted to sell to Great Lakes.
[18] While DeLong was under no obligation to do so, it agreed to sell the futures contracts and apply the amount received against the balance owed by Great Lakes. Since corn was more expensive on February 24, 2021 than when the futures contracts were purchased, there was equity in the contracts.
[19] The futures contracts were sold on February 25, 2021, resulting in a net amount of $96,777 that was applied to the balance owed by Great Lakes. Once this credit was applied, the balance owing was $242,546.99 USD.
[20] Between March and April 2021, a number of demands for payment of the outstanding amount were made by U.S. and Canadian counsel acting on behalf of DeLong. A response was provided by counsel for Mr. Bedessee and Great Lakes, Mr. Smits, on April 6, 2021. In this response, Mr. Smits acknowledged that Mr. Bedessee had provided a personal guarantee on all indebtedness by Great Lakes to DeLong. Mr. Smits sought clarification of the amount owing and proposed a payment plan that would settle the debt without the need for litigation.
The Test for Summary Judgment
[21] The parties are ad idem on the test for summary judgment under Rule 20 of the Rules of Civil Procedure. Simply stated, the court’s role is to determine whether there exists a genuine issue requiring a trial.
[22] In Hryniak v. Mauldin, 2014 SCC 7, the Supreme Court of Canada discussed the scope of the summary judgment and offered the following guidance:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
[23] Summary judgment is only appropriate if, based on the evidence presented on the motion, the judge can confidently make the required factual findings and apply the relevant legal principles so as to fairly resolve the dispute.
[24] On a summary judgment motion, the parties must put their “best foot forward”; see Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9 and Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 32, aff’d 2014 ONCA 878.
[25] The court can also assume that the party responding to a summary judgment motion will present the evidence it intends to rely on at trial in order to prove that its claim or defence has a chance of success. In the vernacular, the responding party must “lead trump or risk losing”, see: 1061590 Ontario Ltd. v. Ontario Jockey Club, (1995), 1995 CanLII 1686 (ON CA), 21 O.R. (3d) 547 (C.A.) at p. 557, Salisbury v. Kraft, 2017 ONSC 177 at para. 12, and Cvjetkovic v. Gupta, 2016 ONSC 2322 at paras. 43-45.
The Issues in Dispute
[26] There are two issues in dispute between the parties:
a. The exact amount owing on account of corn delivered; and,
b. The existence and scope of Mr. Bedessee’s personal guarantee.
The Exact Amount Owing by Great Lakes
[27] Great Lakes agrees that it owes money to DeLong for product received. However, it suggests that the amount owing is $219,456.99 USD, approximately $29,000 less than the amount claimed by DeLong.
[28] There are three factual disputes involved in determining whether the difference of $29,000 is also owed to DeLong by Great Lakes.
[29] First, the amount owing includes $12,102.73 in interest calculated in accordance with the Credit Agreement. DeLong argues that the interest charges are levied in complete accordance with the interest provisions of the Credit Agreement. The defendants argue that they never agreed to an interest charge. They further argue that DeLong did not regularly apply interest to outstanding accounts and that its decision to do so now is unfair.
[30] This argument can be addressed very briefly. There is no dispute that the Credit Agreement provides for the interest rate that was applied to the outstanding balances. There is also no issue that the interest amount was calculated properly using the applicable contractual rate. Mr. Bedessee’s bald assertion that he “at no time” agreed to the interest charge rings hollow. He signed the Credit Agreement which specifically provides for the interest rate applied. Further, the fact that DeLong, in its discretion and as a matter of business practice, did not invariably seek payment of interest on every outstanding account is no defence. There can be no suggestion that DeLong’s conduct reasonably led Great Lakes to believe that the contractual interest rate would not be applied to its outstanding amounts. The evidence is to the contrary. The statements of accounts owing clearly list “financing charges.” At no time prior to the litigation commencing was there any suggestion that those charges were improper or unwarranted.
[31] The balance of the $29,000 stems from two issues relating to the credit applied from the sale of the corn futures contracts First, Great Lakes disputes the value at which the bushels of corn were sold at under the futures contracts. Second, it disputes the number of bushels that remained available for sale under the futures contract, arguing that the amount was 30,000 bushels and not 20,000.
[32] On the first issue, Mr. Bedessee claims that corn was sold at $6.89 per bushel. He provides no evidence supporting this belief. DeLong claims that the corn was sold at $5.435 per bushel. It relies on the statement received from the corn broker who sold the corn to support this number. DeLong has also provided a spreadsheet showing the trading price of corn according to the Chicago Board of Trade. This spreadsheet reveals that on the date of the sale of the futures contracts, corn was trading at $5.425 to $5.606 per bushel. Interestingly, the spreadsheet also reveals that the price of corn did not rise to the amount claimed by Mr. Bedessee until April 27, 2021, months after the actual sale.
[33] In terms of the number of bushels, DeLong has provided invoices and supporting documentation showing the exact number of bushels remaining on the futures contract. This number is precise down to a partial bushel. Conversely, the defendants point to no specific evidence, apart from bare assertion, in support of their submission that more bushels were available.
[34] A trial is not required to determine these issues. The evidence readily and reliably supports the figures proffered by the plaintiff. As a result, I am prepared to find that Great Lakes owes $242,546.99 USD to DeLong.
The Personal Guarantee
[35] The remaining issue is whether the amount owed by Great Lakes was in whole or in part personally guaranteed by Mr. Bedessee. Based on the evidence before me, I am readily satisfied that a trial is not required to determine this issue. I reach this conclusion for the following reasons:
a. The Commercial Credit Application was signed by Mr. Bedessee on behalf of Great Lakes on March 5, 2020. Once executed, this document became the Credit Agreement governing the business arrangement between DeLong and Great Lakes.
b. On that same date, Mr. Bedessee signed, in his personal capacity, a joint and several guarantee in relation to “all indebtedness of the above named corporation [Great Lakes].” This personal guarantee is printed on and forms part of the Commercial Credit Application/Credit Agreement.
c. I reject Mr. Bedessee’s bald assertion that he did not know what he was signing and that he did not have independent legal advice prior to signing the Credit Agreement. Neither of these bald assertions are a defence. In any event, the evidence suggests that Mr. Bedessee clearly understood what he was signing. Indeed, Mr. Bedessee’s counsel wrote to DeLong on his behalf and explicitly confirmed that Mr. Bedessee had personally guaranteed all indebtedness of Great Lakes. As well, in January 2021 when DeLong asked for further guarantees in order to continue shipping corn, Mr. Bedessee signed a document entitled “Continuing Personal Guarantee” purporting to further guarantee the indebtedness of Bedessee Importing Ltd., another company he owned. While it appears that the Continuing Personal Guarantee does not ultimately assist DeLong with its claim against Mr. Bedessee for the debt of Great Lakes, it does reveal another instance wherein Mr. Bedessee was apparently prepared to extend a personal guarantee to cover the debts of one of his companies, and it further belies his suggestion that he did not appreciate the nature of the document he was signing.
d. I reject Mr. Bedessee’s late-breaking affidavit wherein he asserts that he now believes that it is not his signature on the March 5, 2020 Credit Application. In my view, this affidavit is a transparent and futile attempt to manufacture a credibility issue sufficient to defeat the summary judgment motion. First, the late-breaking affidavit directly contradicts Mr. Bedessee’s initial affidavit which contains an explicit acknowledgement that he signed the Credit Agreement. Second, in the late-breaking affidavit, Mr. Bedessee appears to base his new-found belief that he did not sign the original Credit Application on an exchange of emails relating to the Continuing Personal Guarantee that he signed on January 21, 2021. Those emails reveal that an employee of DeLong was concerned that Mr. Bedessee’s signature on the Continuing Personal Guarantee did not match his driver’s licence signature. While Mr. Bedessee confirms that he signed the Continuing Personal Guarantee, there is nothing in these emails calling into question the validity of the signature on the original Credit Application. Third, Mr. Bedessee’s late-breaking assertion that he did not sign the original Credit Application is entirely belied by the email exchange he has with Ms. DeLong on March 6, 2020, wherein she confirms receipt of the Credit Agreement and notes “it appears to be signed by you.” Mr. Bedessee replies to the email and confirms that he is the owner of Great Lakes and is applying for credit. Importantly, he does not deny that his signature appears on the Credit Application.
[36] I turn lastly to the argument that the personal guarantee executed by Mr. Bedessee is limited to $100,000. On this issue, Mr. Bedessee argues that in processing the Commercial Credit Application, DeLong authorized a credit limit of $100,000. Mr. Bedessee takes the further position that his personal guarantee was therefore limited to $100,000.
[37] In my view, this argument is misplaced. The credit limit authorized is unrelated to the scope of the personal guarantee. The personal guarantee portion of the Credit Agreement specifically refers to “all indebtedness.” It does not restrict indebtedness up to the amount of the authorized credit limit. Indeed, it would make little business sense to do so given the potential for interest charges and fees and expenses relating to collection of the debt owing.
[38] The genesis of the $100,000 credit limit is found on a portion of the Credit Agreement which states “This section is to be completed by the DeLong Co., Inc.” Following the heading, the credit limit authorized is stated as $100,000 and the credit level is stated as “N-30.” The credit limit is determined by DeLong after it receives a signed Commercial Credit Application/Credit Agreement, and conducts whatever internal or external credit checks it deems appropriate. In other words, once DeLong receives the signed document which includes the personal guarantee, it decides how much credit it is willing to advance to the customer. In doing so, it is not limiting the amount of the personal guarantee. Rather, it is simply determining how much credit it is willing to advance to the client going forward.
[39] I reject the argument that when DeLong extended credit beyond $100,000 it did so at its own risk. DeLong was free to extend credit as it saw fit. It had a business relationship with Great Lakes and a personal guarantee by Mr. Bedessee for “all indebtedness.” It was up to Mr. Bedessee to determine how much debt his company would accrue in light of his personal guarantee.
[40] Judgment is granted accordingly. The amount owing is in USD. Pre and post judgment interest shall be 1.5% per month in accordance with the terms of the Credit Agreement, see Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 at paras. 40, 49-50.
[41] Counsel are urged to agree upon costs and on this issue, I note that the Credit Agreement provides that the defendants shall be responsible for “all reasonable attorney fees and expenses of collection incurred.”
[42] If the parties are unable to agree on costs, the plaintiff shall file costs submissions no longer than 3 pages in length, exclusive of proper appendices, no later than 14 days after the release of these reasons. The defendants shall file their submissions with the same restriction as to length, no later than 7 days after receipt of the plaintiff’s submissions. The submissions may be submitted to my judicial assistant by email at Diane.Massey@ontario.ca.
Justice J. Di Luca
Released: January 27, 2022
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
The DeLong Co. Inc.
Plaintiff
– and –
Great Lakes Milling Company Inc. and Rayman Bedessee
Defendants
REASONS FOR JUDGMENT
The Honourable Justice J. Di Luca
Released: January 27, 2022