Digest: Leisure North and Co. Holdings Ltd. v Kowal, 2018 SKPC 74

• Date: November 16, 2018

Reported as: 2018 SKPC 74

Docket Number: PC18065 , 17-0817

Court: Provincial Court

Date: 2018-11-16

Judges:

• Schiefner

Subjects:

• Contracts � Breach of Contract � Non-payment
• Contracts � Guarantee � Enforceability
• Contracts � Guarantee � Validity
• Small Claims � Breach of Contract

Digest: The plaintiff was a company selling building products. The plaintiff sued the defendant, T., for recovery of $29,456.67, which was the balance due and owing for goods sold to T.�s sole proprietorship. The other defendant, K., was alleged to be the guarantor of T.�s invoice. T. did not attend the proceedings. K. acknowledged that she personally guaranteed the payment of the goods and materials purchased by T.; however, she alleged that she limited her responsibility to $6,000. The defendants were in a common-law relationship. T. obtained a credit application from the plaintiff and K. described herself as the bookkeeper and guarantor on it. She inserted $6,000 where the form asked �monthly credit desired�. K. indicated that T. was authorized to purchase for the proprietorship. A document entitled �Guarantee� was attached to the Application for Credit. K. completed and signed both the Guarantee and Application for Credit in her own handwriting. Monthly statements were sent, and K. acknowledged that she saw them and was aware that the balance owing exceeded $6,000. She said that she thought T. would be responsible for paying any amounts over $6,000. In October 2015, T. negotiated an increase in credit with the plaintiff. The plaintiff�s claim against T. was for breach of contract for failing to pay for the items he purchased. The claim against K. was for breach of contract due to her failure to fulfill her obligations pursuant to a personal guarantee.
HELD: The court found in favour of the plaintiff. The plaintiff was entitled to judgment against T. in the amount $28,312.83 together with prejudgment interest and costs of $100. The court had to consider three questions to determine the claim against K.: 1) was the Guarantee valid; 2) was the Guarantee enforceable; and 3) did K.�s obligations under the Guarantee extend to the total outstanding balance of the account or was it limited to $6,000 or some other amount? The court determined the questions as follows: 1) the court was satisfied that the document executed by K. was a valid personal guarantee; 2) there was no evidence that K. entered into the Guarantee under duress. The court...