COURT FILE NO.: CV-23-82167
DATE: 2024-01-30
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Business Development Bank of Canada
Plaintiff by Counterclaim
R. Fisher, Counsel for the Plaintiff by Counterclaim
– and –
2332197 Ontario Inc. and Samina Khan
Defendants by Counterclaim
W. Powell, Counsel for S. Khan
HEARD: January 25, 2024
THE HONOURABLE JUSTICE M. BORDIN
REASONS FOR JUDGMENT
Overview
[1] In this simplified procedure action, the plaintiff moves for summary judgment on a loan. The amount outstanding on the loan is $57,838.58 as of November 10, 2023, plus interest.
[2] The corporate defendant is the borrower and the individual defendant, Ms. Khan, is alleged to be the guarantor of the loan. The corporate defendant did not defend the claim. Only Ms. Khan filed a statement of defence.
[3] The plaintiff served the motion on the defendants on December 7, 2023. The defendants filed no responding materials until after the commencement of motions court. At 10:11 a.m. on the morning of the motion Ms. Khan uploaded a short affidavit to CaseLines.
[4] Plaintiff counsel had not seen the affidavit until it was drawn to her attention when the motion was called. After reviewing the affidavit, the plaintiff took no position as to the admissibility of the affidavit. The affidavit of Ms. Khan was admitted.
[5] Plaintiff counsel has the burden of establishing that there is no genuine issue for trial. It has been said repeatedly that each side must put its best foot forward on a motion for summary judgment. A party cannot sit back and hope for the possibility that more favourable facts may develop at trial. Numerous cases have reiterated that the responding party must lead trump or risk losing.
The Plaintiff’s Evidence
[6] The plaintiff’s evidence establishes:
the terms of the loan agreement;
that the borrower defaulted on the loan and demand for payment of the loan was made upon the defendants on June 2, 2023;
that the statement of claim was issued on July 7, 2023;
that Ms. Khan filed a statement of defence on or about August 10, 2023;
that Ms. Khan was informed in July 2023 that she should send a proposed repayment plan for the plaintiff’s consideration. One was never received by the plaintiff;
that Ms. Khan was advised of the documentation required by the plaintiff to consider a settlement or payment plan and was provided with ample opportunity to address the debt, but Ms. Khan did not do so; and
the amount owing on the loan and the applicable interest rate.
The Loan Agreement
[7] The loan agreement is six pages long. The sixth page is the signature page. Ms. Khan signed the loan agreement twice and dated it June 23, 2023. Immediately above the first signature on page 6 of the agreement it states:
SIGNATURES ARE REQUIRED FROM THE BUSINESS AND BUSINESS OWNER(S) EVEN WHEN THE SAME PERSON IS SIGNING IN MORE THAN ONE CAPACITY
WE, THE UNDERSIGNED, HEREBY AGREE TO THE CONDITIONS SET FORTH ABOVE AND CONFIRM THE ACCURACY OF THE DECLARATIONS ABOVE.
[8] Immediately below the first signature is the following:
Guarantee
The Guarantors, if any, are unconditionally liable on a joint and several basis/solidarily to perform all of the obligations of the Borrower and to repay the full amount of the Loan together with accrued interest, plus any fees and costs incurred by BDC in collecting the Loan debt. The Guarantors' obligations will not be reduced, discharged or delayed as a result of any failure by BDC to seek or exhaust its recourse against the Borrower, including any other Guarantor.
Acknowledgement and Waiver
I ACKNOWLEDGE AND CONFIRM THAT I HAVE READ AND UNDERSTOOD THE NATURE OF AND ALL CONSEQUENCES ASSOCIATED WITH THE EXECUTION AND DELIVERY OF THE GUARANTEE GRANTED BY ME TO AND IN FAVOUR OF BDC, WITH RESPECT TO THE LOAN. I FURTHER ACKNOWLEDGE AND CONFIRM THAT I HAVE EITHER OBTAINED INDEPENDENT LEGAL ADVICE IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THE GUARANTEE OR VOLUNTARILY DETERMINED NOT TO SEEK SUCH INDEPENDENT LEGAL ADVICE.
[9] The obligations of the guarantor are clearly set out in these paragraphs which are immediately above the signature line for the guarantor.
[10] Below these paragraphs is Ms. Khan’s name typed above a line, beneath which it states, “Name of Guarantor”. Beside that is Ms. Khan’s signature. Below her signature it reads “Signature of Guarantor”.
Ms. Khan’s Defence and Affidavit
[11] Ms. Khan’s statement of defence is brief. In it she denies all allegations in the statement of claim. She pleads that the damages claimed are excessive, remote or unrecoverable at law. She pleads that she was led to believe that she was not personally responsible for the loan and that she called the plaintiff before signing the loan agreement and was told that the corporation was borrowing the money and it would not affect her personally. She believed what she was told and signed the document.
[12] Ms. Khan’s affidavit is brief. It states:
I am currently 60 years old. Other than a car lease, I have never taken out a loan.
In or about March 2020, my physiotherapy clinic was struggling because of the peak of Covid.
To ensure that my business did not fail, I inquired with the BDC about a business loan.
I filled an application for a loan with the BDC in March 2020.
When it came time to sign the loan agreement in June 2020, I noticed that there were two different spots for me to sign. This confused me, so I called the Contact Client Centre at 1- 888-463-6232. This number was listed on the loan agreement itself. This phone call took place either on June 22 or June 23, 2020 but before I signed the loan agreement.
I asked the agent, a woman, why there were two places to sign and why I had to sign this. The agent replied that by signing as a guarantor, I was simply guaranteeing that this was in fact my corporation. The agent confirmed that the loan was for the corporation.
I explained to the agent that I was concerned because businesses were closing and I was afraid of my business failing and what would happen to me with this loan. The agent replied that I was not personally responsible for the loan and specifically advised that BDC would not go after my home, car, cottage, or boat.
On the basis of this representation, I signed the loan agreement. I would not have signed the loan agreement if it meant that, in the event of a default, the BDC could pursue my personal assets.
It was especially important that my personal assets not be at rick [sic] because my only major asset is my parents' home, which is currently in my name.