Court File and Parties

Court File No.: CV-24-00727213-0000

Date: 2025-10-21

Ontario Superior Court of Justice

Between:

THE TORONTO-DOMINION BANK – Plaintiff

– and –

953322 ONTARIO INC. o/a TERRY'S RESTAURANT AND BAR and DANAI STAMBOULTZIS AKA DIANE STAMBOULTZIS – Defendants

Counsel:

Natalie Marconi, for the Plaintiff

Maneetpal Khera, for the Defendants

Heard: October 17, 2025

Overview

[1] The Toronto-Dominion Bank ("TD Bank") moves for summary judgment on two loans advanced to the corporate defendant, Terry's Restaurant and Bar ("Terry's Restaurant"), and against Diane Stamboultzis ("Diane") in respect of a personal guarantee. TD Bank also claims possession of a home owned by Diane located at 26 Warfield Drive, North York, Ontario (the "Property"), pursuant to a collateral mortgage. It also seeks to enforce a security agreement as against Terry's Restaurant.

Decision

[2] For the reasons that follow I grant summary judgment as sought.

Issues

[3] Issue 1: Has Terry's Restaurant raised a genuine issue for trial in respect of Loans 1 and 2 and whether the Security Agreement should be enforced?

[4] Issue 2: Has Diane raised a genuine issue for trial in respect of the Guarantee and the enforcement of the Mortgage?

Analysis

The Summary Judgment Test

[5] In accordance with r. 20.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the "Rules"), the court shall grant summary judgment if:

a. the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[6] In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and a judge may exercise any of the following powers under r. 20.04(2.1): (1) weighing the evidence; (2) evaluating the credibility of a deponent; and (3) drawing any reasonable inference from the evidence.

[7] The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49, explained:

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.

[8] In order to defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party cannot rest solely on allegations in a pleading. Each side must "put their best foot forward" with respect to the existence or non-existence of material issues to be tried: Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9. Furthermore, "a summary judgment motion cannot be defeated by vague references as to what may be adduced if the matter is allowed to proceed to trial": Diao v. Zhao, 2017 ONSC 5511, at para. 18.

Issue 1: Has Terry's Restaurant raised a genuine issue for trial in respect of Loans 1 and 2 and whether the Security Agreement should be enforced?

[9] There is no genuine issue that requires a trial in respect of Terry's Restaurant's liability pursuant to the Loans or the Security agreement.

[10] Terry's Restaurant is a family-owned business.

Loan 1

[11] On April 12, 2010, Terry's Restaurant entered into a Small Business Credit Agreement dated April 12, 2010 whereby it agreed to pay on demand the balance of any amounts outstanding under a line of credit at the interest rate of prime plus 1%.

Loan 2

[12] On July 20, 2021, Terry's Restaurant entered into a loan agreement whereby it agreed to pay TD Bank $100,000 upon default. The interest rate was 4%.

[13] Loan 2 went into default on April 20, 2024 and this default continues. In addition, there were persistent NSF cheques on Loan 2.

The Demands for Payment

[14] TD Bank issued a demand for payment on both loans on August 23, 2024.

[15] Terry's Restaurant has not paid the outstanding amount pursuant to either Loan 1 or Loan 2.

[16] The amount outstanding pursuant to Loan 1 as of November 1, 2024 is $31,203.54.

[17] The amount outstanding pursuant to Loan 2 as of November 1, 2024 is $85,314.10.

[18] Terry's Restaurant has not raised any genuine issue as to either amount outstanding pursuant to either loan. It has not raised any genuine issue as to whether default occurred pursuant to Loan 2. It argues that TD Bank was not entitled to demand payment pursuant to Loan 1 because there was no default, but this is to misunderstand what Loan 1 was. It was an agreement to pay the line of credit payable on demand such that no default was required before TD Bank could make a demand.

The Security Agreement

[19] On June 23, 2021, Terry's Restaurant entered into a Security Agreement whereby it granted TD Bank a security interest in all of its personal property.

[20] The Security Agreement provides that: (a) the borrower is in default under the Security Agreement if it is in default under any loan agreement with TD Bank, (b) upon the occurrence of an event of default, all or any part of the debts owing by the debtor to TD Bank shall immediately become due and payable at the option of TD Bank; and (c) upon default, TD Bank may immediately take possession of the collateral.

[21] The default pursuant to Loan 2 made all the debts due and payable such that TD Bank was entitled to take immediate possession of the security.

[22] Diane's daughter has sworn an affidavit where she indicates the Terry's Restaurant is no longer operating.

[23] There is no genuine issue that requires a trial.

Issue 2: Has Diane raised a genuine issue for trial in respect of the Guarantee and the enforcement of the Mortgage?

[24] Diane has not raised a triable issue.

[25] Diane was a shareholder of Terry's Restaurant up until 2018 and then became a director as well.

The Guarantee

[26] On April 14, 2010, Diane signed a Guarantee in respect of the obligations of Terry's Restaurant.

[27] The Guarantee provided:

In consideration of The Toronto-Dominion Bank (the "Bank") dealing with or continuing to deal with the Customer, you guarantee payment on demand, of all present and future debts and liabilities of the Customer to the Bank, ("Obligations"). Obligations includes, without limitation, debts and liabilities, both direct and indirect, (whether incurred alone or jointly with others, whether absolute or contingent, whether matured or not matured, and whether for principal, interest or fees) of the Customer to the Bank under any and all credit facilities, overdrafts, mortgages, guarantees, letters of credit, indemnities and includes all costs and expenses, including legal fees and expenses, incurred by the Bank in connection with its dealings with the Customer. You agree to be bound by each of the terms and conditions set out below.

[28] It set out that the extent of the liability was $30,000.

[29] It further provided that the Guarantee was a continuing guarantee:

Your liability under this Guarantee is continuing, absolute and unconditional. It will not be limited, reduced, or otherwise affected by events including the following:

• Any renewal of any loan, mortgage or credit facility forming part of the Obligations, or any change in the terms or amount of existence of the obligations.

The Mortgage

[30] On October 4, 2022, Diane entered into a mortgage with TD Bank in respect of the Property securing the principal sum of $400,000 at the rate of prime plus 10%.

[31] The Mortgage provides that it is granted as a continuing collateral security for payment and satisfaction to TD Bank of all of Diane's obligations, debts, and liabilities, present or future, at anytime owing by Diane to TD Bank. It does not require the payment of any amounts on an ongoing basis. It is also payable on demand.

[32] Article 1.02 provided if Diane failed to pay her debts, TD Bank could, at its discretion take possession of the Property.

The Procedural History

[33] It is important to review the procedural history of this matter prior to delving into the issues.

[34] On September 6, 2024, TD Bank commenced this action by way of Statement of Claim.

[35] On October 24, 2024, the defendants defended.

[36] On October 11, 2024, the defendants served a Demand for Particulars requesting copies of documents related to the Guarantee. On October 21, 2024, TD Bank wrote and stated that it had already provided a copy of the Guarantee.

[37] On November 20, 2024, TD Bank scheduled a motion for summary judgment returnable April 25, 2025 with a timetable.

[38] TD Bank served its materials and Diane responded with an affidavit where she swore that she was asked to sign a document by TD Bank on April 14, 2010 (the Guarantee) but she did not know what it was. She said that TD Bank never required her to obtain independent legal advice. She swore that she was not able to understand, comprehend, or be aware of the risks she was undertaking because she has no formal education nor is English her first language. She said that her husband insisted that she sign the document to assist him with his business ventures.

[39] Then during this litigation, she says she became aware of the Guarantee which appears to have been made in respect of obligations owed by Terry's Restaurant.

[40] She further said that at the time she signed the Guarantee, she was not a director or officer of Terry's Restaurant. Rather, her husband had its care and control, and the Guarantee was to his benefit under Loan 1. She said she did not share any direct benefit from Loan 1.

[41] One week prior to the return of the summary judgment motion, TD Bank located a Certificate of Independent Legal Advice (the "Certificate") signed by Diane in respect of the Guarantee, and it provided an affidavit in that regard. This was outside the court ordered timetable.

[42] The Certificate set out that Diane was agreeing to give her personal Guarantee for $30,000 in support of the obligations of Terry's Restaurant and that she was also agreeing to give a collateral mortgage in respect of the Property in the amount of $115,000.

[43] The Guarantee was attached to the Certificate as was Diane's identification.

[44] The lawyer who gave the advice to Diane certified that he did not have any relationship with either TD Bank or Diane, and that he had explained to Diane the consequences of signing the Guarantee fully and plainly. He said that she fully understood the nature and effect of the Guarantee and that she acknowledged that she was executing the Guarantee freely and voluntarily as her own act and deed without any fear, threat, influence, or compulsion from her husband, the borrower, Terry's Restaurant, or TD Bank. He confirmed that he gave his advice to Diane prior to the delivery of the Guarantee to TD Bank.

[45] Diane certified that she acknowledged that all of the statements in the lawyer's Certificate were true and correct, and that no one had used any compulsion or made any threats or exercised any undue influence to make her sign the Guarantee and that the lawyer in advising her as stated was consulted by her as her own personal solicitor and in her interests only. She confirmed that she had received the advice before delivery of the Guarantee to TD Bank.

[46] The supplementary affidavit submitted by TD Bank also attached certain other documents TD bank had obtained from Diane so that she could qualify to be a guarantor for Terry's Restaurant, including Notices of Assessment, a Net Worth Statement which she provided to TD Bank, as well as an Acknowledgement confirming that the collateral mortgage secured Terry's Restaurant's line of credit.

[47] The parties attended CPC court, and the motion was adjourned as Diane's counsel indicated that he wanted to do examinations as a result of the new material which had taken them by surprise.

[48] Afterwards, TD Bank wrote to Diane's counsel 19 times seeking to schedule examinations that Diane's counsel said he wanted, but none were ever scheduled.

[49] As well, Diane did not provide any further affidavit of her own in respect of the Certificate produced by TD Bank.

Undue Influence

[50] I reject the argument that there is a genuine issue in respect of whether Diane was unduly influenced to enter into the Guarantee.

[51] Diane relies on Bank of Montreal v. Duguid 2000 at para 8 where the Court of Appeal held that "where a claimant relies upon a presumption of undue influence, the court must look to the nature of the relationship and determine whether the potential for domination exists as a matter of fact or whether it may be presumed". In such cases, a wife may set aside a transaction where she can establish it was actually procured by undue influence or where she can raise a presumption by demonstrating that de facto she left decisions on financial matters to her husband. Where a third party acted as the agent in procuring the transaction or had has constructive knowledge of the undue influence, they will be bound by the wife's equity in setting aside the transaction.

[52] The vague statement that Diane's husband insist that she sign the Guarantee to assist with the business does not raise a triable issue as to Diane leaving decisions on financial matters to her husband such that there is a presumption of undue influence. There is also no evidence that TD Bank had any knowledge of any issues relevant to Diane and her husband's relationship.

[53] Furthermore, even if there was a presumption of undue influence it is rebutted by the Certificate. As noted, Diane has provided no supplementary affidavit to challenge the Certificate, the advice she got, or what it says about her entering into the Guarantee of her own accord.

[54] I add that she never pleaded undue influence in her Statement of Defence.

Accommodation Surety

[55] She also argues that she is an accommodation surety, or someone who entered into the Guarantee in the expectation of little or no remuneration. The law protects such guarantors by strictly construing their obligations and limiting them to the precise terms of the contract of surety: Manulife Bank of Canada v. Conlin at para 6.

[56] In support of this she references her evidence that her husband had the care and control of Terry's Restaurant and that she did not benefit from Loan 1.

[57] However, the Net Worth Statement she provided TD Bank shows that she was an owner of Terry's Restaurant. It also shows that one of her sources of income was Terry's Restaurant. She has also been a Director since 2018. It was a family business. She obtained a benefit as an owner of a family business that provided her family with income.

[58] She did not file any affidavit questioning the contents of her Net Worth Statement.

[59] Further, even strictly construed, the Guarantee, on an objective basis, is a continuing guarantee in respect of all of Diane's future and present debts to TD Bank. It is unclear what parts of it could be strictly construed as against TD Bank for Diane to avoid liability.

Non est Factum

[60] I also reject the argument that there is a genuine issue in respect of Diane's ability to understand, comprehend, or be aware of the risks she was undertaking such that the doctrine of non est factum applies.

[61] I note that Diane does not say that she does not speak English, but only that English is not her first language. She provides no details as to what her facility with the English language is. Her affidavit was sworn in English and there is no jurat as required under the Rules when an individual cannot speak English.

[62] The Certificate from the lawyer is in English and there is no notation thereon that she required a translator. It also provides evidence that she has not contradicted that a lawyer explained the document that she was signing.

[63] Further, non est factum will not succeed if one is careless or reckless in failing to read or makes no effort to understand the contract: Marvco Colour v. Harris, 1982 CarswellOnt 142 at paras 24 and 25.

[64] Diane acknowledges she was asked to sign something by TD Bank, but does not say what she thought it was, or what steps she took to understand what it was or why the lawyer's Certificate somehow should not be accepted.

[65] Furthermore, the Court of Appeal has confirmed that when a party signing documents is a shareholder, failure to read the documents is beyond mere carelessness and is fatal to non est factum. It is in fact, something much more extreme as it amounts to indifference and this will not afford the party any defence: Guarantee Co. of North America v. Ciro Excavating & Grading Ltd., 2015 ONSC 4465 at paras. 14, 20-22, 25, Bulut v. Carter, 2014 ONCA 424 at para 20. This applies to Diane.

[66] Further, as noted, Diane provided her personal income tax returns, notices of assessment and a Net Worth Statement to qualify for the Guarantee. Providing these types of documents and the level of information about her assets is inconsistent with her position that she did not know she was entering into a Guarantee. It shows that she was working with TD Bank to qualify for the Guarantee. Again, after TD Bank provided its further affidavit, she provided no additional evidence explaining any reason why these documents were not what they appeared to be.

[67] Diane's evidence here is a far cry from the kind of evidence that could reasonably support an allegation of non est factum. It was up to her to put her best foot forward and explain why the Guarantee should not be enforced against her.

Fairness of the Process

[68] I disagree that there is anything nefarious about TD Bank's failure to disclose some of the documents that it ultimately produced, including the Certificate, and that its failure to do so initially somehow undermined the integrity of the process. Clearly these documents assisted TD Bank, and it is hard to accept that the failure to produce them initially was anything other than its failure to have found them.

[69] TD Bank argues that Diane's initial affidavit shows that she is not credible because she denied receiving independent legal advice which is clearly not true. She could have explained this by saying that she had forgotten because it was more than ten years ago but did not.

[70] This does raise credibility concerns about her evidence overall.

Material Alteration of the Guarantee

[71] I also reject the argument that there is a genuine issue as to whether the terms of the Guarantee have been materially altered such that she should be released from liability: Manulife v. Conlin at para 4

[72] Diane points out that the Certificate references a mortgage on her Property that she entered into in the amount of $115,000 in 2010. This earlier mortgage was ultimately discharged.

[73] Then, after she became a director of Terry's Restaurant, she entered into the Mortgage securing the principal amount of $400,000.

[74] She says that this constitutes a material alteration such that the Guarantee is no longer enforceable.

[75] However, the lawyer who signed the Certificate gave Diane advice on two separate things, the Guarantee and the earlier mortgage. The Guarantee was not tied to the earlier mortgage, or the amount of the earlier mortgage. This is the main distinction between this case and Pax Management Ltd. v. Canadian Imperial Bank of Commerce, [1992] S.C.J. No. 78 at para 37.

[76] The fact that she entered into a subsequent, new Mortgage with a greater face value and even higher interest rate did not alter her indebtedness pursuant to the terms of the Guarantee in any event and, as such, did not expose her to any greater risks: Royal Bank of Canada v. Samson Management & Solutions Ltd. et al., 2013 ONCA 313 at para 19.

[77] The Mortgage was not a debt instrument; it was collateral security for any debts she might have to TD Bank.

[78] The Guarantee continued to guarantee the debt under Loan 1, which loan was not increased. All that happened was that mortgage security was increased. The fact that the Mortgage says it secures the principal amount of $400,000 as opposed to the old amount of $115,000 previously secured does not mean that Diane's liability under the Guarantee has changed. It is exactly the same. I infer that the reason why the face value was increased was that Diane had become a Director of Terry's Restaurant and it was conceivable that TD Bank could make further loans to Terry's Restaurant. And so, rather than enter into new collateral mortgages each time the amount was increased, the parties agreed that she would enter into a Mortgage that secured $400,000.

[79] The new Mortgage also specifically states that if there is a conflict between the interest rate on the mortgage and on any credit facility, that the interest rate on the credit facility will apply. Therefore, there is also no change to the interest rate. The interest rate on Loan 1, which was something that applied before, is still the same interest rate applicable.

[80] Furthermore, even though there was no independent legal advice in respect of the new Mortgage, lack of independent legal advice is not a defence: Trez Capital Limited Partnership v Ontario International College Inc., 2018 ONSC 4978, at para 42; Bank of Montreal v Featherstone, 1989 CarswellOnt 164.

[81] I point out that she was a director of Terry's Restaurant when she gave the new Mortgage and it was something she had done in the past in 2010 with independent legal advice.

[82] Finally, the Guarantee, by its express terms, was a continuing guarantee in respect of any of Diane's debts, future or past pursuant to any instrument.

The Quantum of Indebtedness Pursuant to the Guarantee

[83] I also reject the argument that there is any genuine issue in respect of the amount of Diane's indebtedness pursuant to the Guarantee.

[84] The Guarantee expressly said it was for $30,000.

[85] Diane points to the following general standard form language in the Guarantee:

If you are an individual providing a personal guarantee, the extent of your liability under this Guarantee for any and all loans and advances made under the Small Business Loans Act (each such loan an "SBL") and under the Canada Small Business Financing Act (each such loan a "CSBFA") shall be limited to 25% of the original amount of each SBL and CSBFA.

[86] TD Bank has provided sworn evidence that Loan 1 was not a loan pursuant to either of the above Acts. Diane did not provide any sworn evidence in response to show that it was.

[87] Further, a perusal of these Acts shows that it could not have been.

[88] Loan 1 was given in 2010 and therefore was NOT made under the SBLA because the SBLA was repealed on March 31, 1999 and continues to apply only to loans made prior to April 15, 1999.

[89] The CSBFA replaced the SBLA and was enacted on December 10, 1998 and applies to loans made after March 31, 1999.

[90] Loan 1 could not possibly have been made under the CSBFA because only these specific types of loans were mandated under this Act by the government: (1) the purchase of real property; (2) leasehold improvements to real property; (3) purchase or improvement of equipment; and (4) payment of registration fees in respect to any of the aforementioned classes. And Loan 1 was NOT one of these types of loans, instead it was a business line of credit: Canada Small Business Financing Regulations (SOR/99-141) Version of section 5 from 2022-07-04 to 2024-04-11

Lapse in Time and her Personal Characteristics

[91] The lapse in time between when she entered into the Guarantee and the present time also does not raise a defence. Again, the Guarantee was a continuing guarantee.

[92] Her age and low income in past years is also no defence.

[93] While I appreciate that Diane is elderly and that the Guarantee is secured against her home, she can stop the sale by simply paying the amount she owes under the Guarantee which is a little over $30,000.

[94] She has provided no evidence of any impecuniosity. Indeed, as will be seen, rather than simply pay her indebtedness pursuant to the Guarantee, she has spent almost the same amount to fight this proceeding.

Conclusion

[95] Therefore, I award TD Bank judgment against Terry's Restaurant in the amount of $85,314.10 pursuant to Loan 2 and also make an order that Terry's Restaurant deliver up possession of its personal property.

[96] As against Terry's Restaurant, I also grant judgment in the amount of $31,203.54 as of November 1, 2024 pursuant to Loan 1.

[97] As against Terry's Restaurant I award the contractual rate based upon well-established caselaw: Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, 2002 CarswellOnt 1114 at para 21; Capital One Bank v. Matovska, 2007 CarswellOnt 5605

[98] I grant TD Bank judgment as against Diane on the Guarantee in the amount of $30,000 which is the maximum due under that note. I do not apply the contract rate for Loan 1 to pre and post judgment interest as the contract rate should only apply up until the maximum indebtedness pursuant to the Guarantee is reached which it has.

[99] Instead, I apply the rates in the Courts of Justice Act, R.S.O. 1990, C. C.43 beginning on the date of the issuance of the Statement of Claim.

[100] I also grant an order for possession under the Mortgage.

Costs

[101] TD Bank claims $22,331.99. It has provided a bill of costs with sufficient detail. It argues that Terry's Restaurant should have consented to judgment as it had no defence. I agree.

[102] As against Terry's Restaurant, I award this amount.

[103] The Mortgage and Guarantee provide that the mortgagor and obligor shall pay costs of legal proceedings on a substantial indemnity basis. The Court of Appeal has held that a contractual term for highest level costs is binding and must be applied: Adelaide Capital v. Pretoro Developments Inc., 1999 CarswellOnt 1457.

[104] TD Bank seeks substantial indemnity costs against Diane.

[105] Diane argues that part of the reasons that costs were run up was that TD Bank failed to disclose the Certificate and other documents in the first place. She argues that if it had, then this matter might have been resolved. She also argues that she was put to the expense of preparing for the initial hearing which included a factum, and then having to respond to new materials by TD Bank.

[106] I agree that this did increase the costs.

[107] I note that Diane's Bill of costs on a partial indemnity basis is $16,320 and on a substantial indemnity basis is $25,740.27, so TD Bank's costs were within her reasonable contemplation.

[108] Nevertheless, in view of TD Bank's failure to comply with the initial timetable which resulted in an adjournment and increased costs, I award TD Bank $12,500 in costs. I also accept that had TD Bank provided the Certificate and other documents in the first place, it would have been more likely that this matter would settle, thus resulting in both parties saving costs.

[109] To the extent TD Bank recovers its costs from Terry's restaurant, it shall not be able to recover the same costs from Diane because this would be double recovery since TD Bank submitted one bill of costs as against both defendants.

Papageorgiou J.

Released: October 21, 2025