Agrifoods International Cooperative Ltd. v. South Trail Restaurant Inc. et al., (1997) 195 A.R. 360 (QBM)

• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: January 02, 1997
• Citations: (1997), 195 A.R. 360 (QBM)

Agrifoods v. South Trail Restaurant (1997), 195 A.R. 360 (QBM)

MLB headnote and full text

Agrifoods International Cooperative Ltd. operating as Dairyworld Foods (plaintiff) v. South Trail Restaurant Inc. operating as McCormick's Restaurant, Northlands Cafe Inc. operating as Cheesecake Cafe, The Cheesecake Cafe, Capital Estates Inc. operating as Maxwell Taylor's Restaurant and Cheesecake Cafe, Maxwell Taylor's Inc. operating as Maxwell Taylor's, MT Management Inc. operating as Cheesecake Cafe, The Cheesecake Cafe, McCormick's Restaurant, and Maxwell Taylor's Restaurant, MT Management Inc., Robert Beeson and Alexander Lewoniuk (defendants)

(Action No. 9603-03223)

Indexed As: Agrifoods International Cooperative Ltd. v. South Trail Restaurant Inc. et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Funduk, Master in Chambers

January 2, 1997.

Summary:

The plaintiff, Agrifoods, supplied food products on credit to the defendant bankrupt restaurants until April 1995. Agrifoods sued the defendants for outstanding debts. MT operated the restaurants as an economic unit. On April 5, 1995, Beeson and Lewoniuk, as principals of MT, signed personal guarantees regarding the restaurants' indebtedness. On December 4, 1995, MT, per Lewoniuk, signed an acknowledgement of MT's indebt­edness. Agrifoods sought summary judgment against the guarantors. The guarantors sought rectification of the guarantee and argued that they were not liable for the outstanding debts.

A Master of the Alberta Court of Queen's Bench awarded summary judgment.

Deeds and Documents - Topic 5055

Rectification - When available - Intention of parties - Agrifoods supplied food prod­ucts to the defendant bankrupt restaurants until April 1995 - The defendants sub-sequently obtained their products from a food broker - Agrifoods sued the defend­ants for outstanding debts - On April 5, 1995, the principals of MT signed personal guarantees - On December 4, 1995, MT signed an acknowledgement of indebted­ness - Agrifoods sought summary judg­ment against the guarantors - The guaran­tors sought rectification, claiming that the guarantees did not reflect their intention that it only apply to future debts - A Master of the Alberta Court of Queen's Bench refused to grant rectification where a guarantee limited to future purchases was senseless since there would be no future purchases; the guarantee was prepared by MT's solicitor on MT's instructions and signed in its office and there was no com­mon intention between Agrifoods and the guarantors - See paragraphs 33 to 45.

Guarantee and Indemnity - Topic 144

The contract - Consideration - What constitutes consideration - Agrifoods supplied food products to the defendant bankrupt restaurants until April 1995 - Agrifoods sued the defendants for out­standing debts - On April 5, 1995, Beeson and Lewoniuk, as principals of MT, signed personal guarantees under seal - Agrifoods granted MT an extension of time for re­payment of its indebtedness and in return, MT, per Lewoniuk, signed an ac­knowl­edgement of MT's indebtedness - Agri­foods sought summary judgment against the guarantors - The guarantors argued lack of consideration - A Master of the Alberta Court of Queen's Bench granted summary judgment - Giving more time to a debtor to pay a debt was good consider­ation to support a third party's promise to be liable for the debt - Fur­thermore, as the acknowledgment was under MT's seal, no consideration was necessary - See para­graph 25.

Guarantee and Indemnity - Topic 1109

Liability of surety to creditor - Judgment against surety - Interest - A guarantee stipulated that interest ran on any judgment at the contract rate - A Master of the Alberta Court of Queen's Bench held that it was bound by Avco Financial Services Canada Ltd. v. Kilbreath and that interest ran on the judgment at the statutory rate - See paragraphs 46 to 47.

Guarantee and Indemnity - Topic 2504

Discharge and other defences of surety - General - Failure to prove principal debt - Agrifoods supplied food products to the defendant bankrupt restaurants until April 1995 - Agrifoods sued the defendants for outstanding debts - On April 5, 1995, Beeson and Lewoniuk, as principals of MT, signed personal guarantees - On December 4, 1995, MT, per Lewoniuk, signed an acknowledgement of MT's in-debtedness - Agrifoods sought summary judgment against the guarantors - The guarantors argued that MT was not liable as it did not own any of the restaurants - A Master of the Alberta Court of Queen's Bench granted summary judgment - MT operated the restaurants as an economic unit - MT was liable under the December 4, 1995 binding contract - Where the guarantors were the debtor's principals, the guarantors could not refuse to acknowledge the debtor's written acknowledgement of debt - See paragraphs 22 to 32.

Cases Noticed:

Co-operative Trust Co. of Canada v. Kirkby and Thorpe, [1986] 6 W.W.R. 90; 51 Sask.R. 298 (Q.B.), refd to. [para. 27].

Veteran Appliance Service Co. v. 109272 Developments Ltd. and Brosseau et al. (1985), 67 A.R. 117 (Q.B.), affd. (1987), 76 A.R. 340 (C.A.), leave to appeal refused (1987), 80 N.R. 401; 79 A.R. 240 (S.C.C.), refd to. [para. 27].

ABC Color & Sound Ltd. et al. v. Royal Bank of Canada (1991), 117 A.R. 271; 2 W.A.C. 271 (C.A.), refd to. [para. 27].

Trimac Ltd. v. C-I-L Inc. (1987), 79 A.R. 378; 52 Alta. L.R.(2d) 263 (Q.B.), refd to. [para. 41].

Bank of Montreal v. Vancouver Pro­fes­sional Soccer Ltd. (1987), 15 B.C.L.R.(2d) 34 (C.A.), refd to. [para. 43].

National Trust Co. v. Conroy (1995), 168 A.R. 161; 28 Alta. L.R.(3d) 213 (Q.B. Master), refd to. [para. 46].

Avco Financial Services Canada Ltd. v. Kilbreath (1996), 192 A.R. 131 (Q.B.), folld. [para. 46].

Counsel:

P.D. Kirwin (Kirwin Kobewka), for the plaintiff;

J.P. Rossall (McLennan Ross), for the guarantors.

This application was heard before Funduk, Master in Chambers, of the Alberta Court of Queen's Bench, Judicial District of Ed­monton, who delivered the following judg­ment on January 2, 1997.