Hongkong Bank of Canada v. 414577 Alberta Ltd. and Fife, (1995) 167 A.R. 321 (QBM)

• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: February 17, 1995
• Citations: (1995), 167 A.R. 321 (QBM)

Hongkong Bk. v. 414577 Alta. Ltd. (1995), 167 A.R. 321 (QBM)

MLB headnote and full text

Hongkong Bank of Canada (plaintiff) v. 414577 Alberta Ltd. and John George Fife (defendants)

(Action No. 9403 03871)

Indexed As: Hongkong Bank of Canada v. 414577 Alberta Ltd. and Fife

Alberta Court of Queen's Bench

Judicial District of Edmonton

Funduk, Master in Chambers

February 17, 1995.

Summary:

The plaintiff bank loaned 414577 Alberta Ltd. $66,250 secured by, inter alia, a guar­antee from Rancor Equipment Corp. and a guarantee from the principal of 414577 (Fife). 414577 defaulted on the loan. The plaintiff applied for summary judgment against 414577 and Fife.

A Master of the Alberta Court of Queen's Bench granted summary judgment against both defendants with costs on a solicitor and client basis.

Equity - Topic 3023

Equitable rules affecting property - Marshalling - When applicable - [See first Guarantee and Indemnity - Topic 625 ].

Guarantee and Indemnity - Topic 124

The contract - Formation of contract - Non est factum - General - A Master of the Alberta Court of Queen's Bench stated that "[w]here the two fact requirements spelled out in s. 5 [of the Guarantees Acknowledgement Act] exist a defence of non est factum is not available because s. 5 and a defence of non est factum are mutually exclusive. Both cannot exist. Where s. 5 does apply (the two facts are present) the certificate is conclusive proof that the guarantor was aware of the con­tents of the guarantee and understood it" - See paragraphs 20 and 21.

Guarantee and Indemnity - Topic 124

The contract - Formation of contract - Non est factum - General - A bank loaned 414577 Alberta Ltd. $66,250 secured by, inter alia, a guarantee from the principal of 414577 (Fife) - 414577 defaulted - The bank sought summary judgment against 414577 and Fife - Fife argued, inter alia, that a proper certificate was not obtained in accordance with the Guarantees Acknowledgment Act, claiming that he was not advised that he was sign­ing a guarantee in his personal capacity - A Master of the Alberta Court of Queen's Bench rejected the argument - The Master stated that the correct approach where the guarantor pleads non est factum was for "the guarantor to plead facts going to s. 5(b) [of the Act] and to present some evidence on that to be able to successfully resist a summary judgment application. Both are missing here" - See paragraphs 13 to 34.

Guarantee and Indemnity - Topic 625

Duties of creditor - Actions against surety - Duty to exhaust other recourse - A bank loaned 414577 Alberta Ltd. $66,250 secured by, inter alia, a guarantee from Rancor Equipment and a guarantee from the principal of 414577 (Fife) - Rancor had also given the bank security for its own loan - Rancor defaulted on its loan - 414577 also defaulted - The bank sought summary judgment against 414577 and Fife (the defendants) respecting the 414577 loan - The defendants argued, inter alia, that the bank had appointed a receiver of Rancor pursuant to the Rancor loan secu­rity and that based on the doctrine of marshalling any excess realized from the receivership should be applied to the claim against 414577 and Fife - A Master of the Alberta Court of Queen's Bench rejected the argument - The guar­antee provided that the bank was not obliged to proceed against Rancor before proceeding against the defendants - See para­graphs 82 to 89.

Guarantee and Indemnity - Topic 625

Duties of creditor - Actions against surety - Duty to exhaust other recourse - A bank loaned 414577 Alberta Ltd. $66,250 secured by, inter alia, a guarantee from Rancor Equipment and a guarantee from the principal of 414577 (Fife) - 414577 defaulted - The bank sought summary judgment against 414577 and Fife respect­ing the 414577 loan - Fife argued, inter alia, that the bank had represented that it would proceed against Rancor first re­specting the 414577 loan and that the bank prejudiced Fife's position by not proceed­ing against Rancor in a timely fashion - A Master of the Alberta Court of Queen's Bench rejected the argument - The guar­an­tee provided that the bank was not obliged to proceed against Rancor before being entitled to payment from Fife - See para­graphs 97 to 102.

Guarantee and Indemnity - Topic 625

Duties of creditor - Actions against surety - Duty to exhaust other recourse - [See Guarantee and Indemnity - Topic 2666 ].

Guarantee and Indemnity - Topic 2511

Discharge and other defences of surety - General - Lack of independent legal advice for surety - A bank loaned 414577 Alberta Ltd. $66,250 secured by, inter alia, a guarantee from the principal of 414577 (Fife) - 414577 defaulted - The bank sought summary judgment against 414577 and Fife - Fife argued, inter alia, that independent legal advice was not obtained in relation to the execution of the guaran­tee - A Master of the Alberta Court of Queen's Bench held that the defence that Fife did not get independent legal advice had no triable merit - There was no plea and no evidence that there was undue influence exerted on Fife or that there was something unconscionable about the giving of the guarantee - There was also no plea and no evidence of coercion or duress by the bank - See paragraphs 35 to 71.

Guarantee and Indemnity - Topic 2517

Discharge and other defences of surety - General - Noncompliance with guarantee legislation - [See second Guarantee and Indemnity - Topic 124 ].

Guarantee and Indemnity - Topic 2663

Discharge and other defences of surety - Acts of creditor - Breach of principal contract - A bank loaned 414577 Alberta Ltd. $66,250 secured by, inter alia, a guar­antee from Rancor Equipment and a guar­antee from the principal of 414577 (Fife) -414577 defaulted - The bank sought sum­mary judgment against 414577 and Fife respecting the 414577 loan - Fife argued, inter alia, that the bank breached the loan contract because it was an oral term of the loan that if there was default, the bank would first proceed against Ran­cor on its guaran­tee - A Mas­ter of the Alberta Court of Queen's Bench rejected the argu­ment - Fife could not allege a breach of the loan contract where he had expressly agreed in the guarantee that the bank was not obliged to enforce its rights against any other party before being entitled to pay­ment from Fife - See para­graphs 103 to 121.

Guarantee and Indemnity - Topic 2666

Discharge and other defences of surety - Acts of creditor - Misrepresentation to guarantor - A bank loaned 414577 Alberta Ltd. $66,250 secured by, inter alia, a guar­antee from Rancor Equipment and a guar­antee from the principal of 414577 (Fife) -414577 defaulted - The bank sought sum­mary judgment against 414577 and Fife - Fife argued that the bank repre­sented that it would pursue Rancor and any security granted by Rancor, prior to mov­ing against other property or parties - A Master of the Alberta Court of Queen's Bench rejected the argument - The guar­antee stated that no statements, representa­tions, agreements or promises had been made to the guaran­tor except as specified therein - It also expressly stated that the bank was not required to first pursue 414577 or Rancor or enforce any securities it held before being entitled to payment from Fife - See paragraphs 72 to 81.

Guarantee and Indemnity - Topic 2703

Discharge and other defences of surety - Security - General - Improperly dealing with security - A bank loaned 414577 Alberta Ltd. $66,250 secured by, inter alia, a guarantee from Rancor Equipment and a guarantee from the principal of 414577 (Fife) - Rancor had also given the bank security for a loan which it obtained from the bank - Rancor defaulted on its loan - 414577 also defaulted - The bank sought summary judgment against 414577 and Fife (the defendants) respecting the 414577 loan - The defendants argued, inter alia, that the bank had appointed a receiver of Rancor pursuant to the security granted for the Rancor loan, that the receiver improp­erly realized on Rancor's assets to the detriment of the defendants' rights and that the defendants' obligations were thereby released - A Master of the Alberta Court of Queen's Bench rejected the defence - See paragraphs 90 to 96.

Cases Noticed:

Camco Inc. v. Northwind Industries Ltd. et al. (1982), 36 A.R. 585 (Q.B. Master), refd to. [para. 15].

Teachers' Investment and Housing Co-operative v. S.H. Properties Ltd. (1984), 55 A.R. 241 (Q.B.), refd to. [para. 21].

Pensionfund Properties Ltd. v. Giblin (R.K.) and Associates Ltd. et al. (1984), 55 A.R. 345 (Q.B.), affd. 61 Alta. L.R.(2d) lii (C.A.), refd to. [para. 21].

Canadian Imperial Bank of Commerce v. Chang et al. (1985), 64 A.R. 56; 40 Alta. L.R.(2d) 315 (Q.B.), refd to. [para. 21].

Alberta v. Ronsdale Construction Inc. et al. (1984), 58 A.R. 115 (Q.B. Master), refd to. [para. 21].

Victoria Insurance Co. of Canada v. Gen­ereux et al. (1985), 64 A.R. 213; 40 Alta. L.R.(2d) 208 (Q.B. Master), refd to. [para. 21].

Credit Foncier Trust Co. v. Flom et al. (1985), 64 A.R. 282 (Q.B.), refd to. [para. 21].

Royal Bank of Canada v. Highfield Corp. et al. (1991), 123 A.R. 235 (Q.B.), refd to. [para. 21].

Canadian Imperial Bank of Commerce v. Public Trustee (Alta.) et al. (1993), 137 A.R. 352 (Q.B.), consd. [para. 22].

Canadian Imperial Bank of Commerce v. 3L Trucking Ltd. et al. (1993), 147 A.R. 146; 15 Alta. L.R.(3d) 133 (Q.B.), consd. [para. 22].

Brown v. Northey and Killian's Restaurant (1987) Ltd. (1991), 115 A.R. 321 (C.A.), consd. [para. 26].

Marvco Color Research Ltd. v. Harris and Harris, [1982] 2 S.C.R. 774; 45 N.R. 302; 141 D.L.R.(3d) 577, refd to. [para. 33].

Royal Bank v. Hinds (1978), 20 O.R.(2d) 613 (H.C.), refd to. [para. 46].

Buchanan v. Canadian Imperial Bank of Commerce (1980), 125 D.L.R.(3d) 394 (B.C.C.A.), refd to. [para. 46].

Lloyds Bank v. Bundy, [1975] Q.B. 326 (C.A.), consd. [para. 47].

National Westminster Bank v. Morgan, [1985] 1 A.C. 686 (H.L.), consd. [para. 48].

Geffen v. Goodman Estate, [1991] 2 S.C.R. 353; 127 N.R. 241; 125 A.R. 81; 14 W.A.C. 81, refd to. [para. 51].

Lobb (Alec) Garages Ltd. v. Total Oil Great Britain Ltd., [1985] 1 All E.R. 303 (C.A.), consd. [para. 53].

Pao On v. Lau Yiu Long, [1980] A.C. 614 (P.C.), refd to. [para. 58].

Bauer v. Bank of Montreal, [1980] 2 S.C.R. 102; 32 N.R. 191; 110 D.L.R.(3d) 424, consd. [para. 59].

Avon Finance Co. v. Bridger, [1985] 2 All E.R. 281 (C.A.), consd. [para. 60].

Gillett v. Gillett (1979), 18 A.R. 1; 9 Alta. L.R.(2d) 238 (T.D.), refd to. [para. 62].

Hayward v. Bank of Nova Scotia and Dunnell (1985), 10 O.A.C. 391; 19 D.L.R.(4th) 758 (C.A.), consd. [para. 63].

Columbia Trust Co. v. Solihull Enterprises Ltd. (1986), 3 B.C.L.R.(2d) 123 (S.C.), consd. [para. 64].

Rochdale Credit Union Ltd. v. Barney (1984), 7 O.A.C. 9; 48 O.R.(2d) 676 (C.A.), refd to. [para. 66].

Bertolo v. Bank of Montreal (1986), 18 O.A.C. 262; 57 O.R.(2d) 577 (C.A.), consd. [para. 66].

Weitzman v. Hendin (1986), 31 D.L.R.(4th) 109 (Ont. H.C.), refd to. [para. 66].

Beaulieu and Beaulieu v. National Bank of Canada (1984), 55 N.B.R.(2d) 154; 144 A.P.R. 154 (C.A.), consd. [para. 67].

Creditel of Canada Ltd. v. Terrace Corp. (Construction) Ltd. and Terrace Inn (1983), 50 A.R. 311 (C.A.), refd to. [para. 73].

Marwood Cedar Homes Ltd. v. Hanson Food Processing Ltd. (1988), 86 A.R. 207 (Q.B. Master), refd to. [para. 75].

Cooper v. Molson's Bank (1986), 26 S.C.R. 611, refd to. [para. 77].

Pax Management Ltd. et al. v. Canadian Imperial Bank of Commerce, [1992] 2 S.C.R. 998; 141 N.R. 324; 15 B.C.A.C. 81; 27 W.A.C. 81, refd to. [para. 95].

Alberta Opportunity Co. v. Bennett (1992), 132 A.R. 310 (Q.B. Master), refd to. [para. 95].

Royal Bank of Canada et al. v. McMurchy (1986), 70 A.R. 295 (C.A.), refd to. [para. 96].

Holland-Canada Mortgage Co. v. Hutch­ings, [1936] S.C.R. 165, consd. [para. 107].

Bank of Montreal v. Wilder, [1986] 2 S.C.R. 551; 70 N.R. 341, consd. [para. 108].

Bank of British Columbia v. Turbo Resources Ltd. (1983), 46 A.R. 22; 27 Alta. L.R.(2d) 17 (C.A.), refd to. [para. 109].

Bank of India v. Trans Continental Com­modity Merchants Ltd. and Patel, [1982] 1 Lloyd's Rep. 506 (Q.B.), affd. [1983] 2 Lloyd's Rep. 298 (C.A.), consd. [para. 111].

Meridian Developments Ltd. v. Nu-West Group (1984), 52 A.R. 248 (C.A.), consd. [para. 115].

Statutes Noticed:

Guarantees Acknowledgement Act, R.S.A. 1980, c. G-12, sect. 3 [paras. 15, 27]; sect. 4 [paras. 15, 23, 27]; sect. 5 [para. 15 et seq.]; sect. 5(a) [paras. 14, 23]; sect. 5(b) [para. 14 et seq.].

Limited Liability Act, 1855, 18 & 19 Vict., c. 133, generally [para. 29].

Authors and Works Noticed:

Alberta, Institute of Law Research and Reform, Report on Guarantees, Report No. 5, October 1970, generally [para. 42].

Jowitt's Dictionary of English Law [para. 87].

Counsel:

M. McCabe (Cruickshank Karvellas), for the plaintiff;

D.N. Tkachuk (Bryan & Co.), for the defendants.

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 decision on February 17, 1995.