HSBC Bank Canada v Macaulay, 2021 ABQB 416

Court of Queen’s Bench of Alberta Citation: HSBC Bank Canada v Macaulay, 2021 ABQB 416 Date: 20210527 Docket: 1601 12451 Registry: Calgary Between: HSBC Bank Canada Plaintiff - and - John Macaulay and Kayla Macaulay Defendants Docket: 1601 14086 Between: HSBC Bank Canada Plaintiff - and - Kent Devlin Defendant Docket: 1601 14092 Between: HSBC Bank Canada Plaintiff - and - Kim Jespersen Defendant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice O.P. Malik _______________________________________________________ I. Introduction

[ 1 ] The Defendants appeal a Master’s decisions, reported at HSBC Bank Canada v Macaulay , 2019 ABQB 178 and HSBC Bank Canada v Macaulay , 2019 ABQB 649 , granting the Plaintiff

summary judgment in respect of the Defendants’ unpaid loans and awarding the Plaintiff its solicitor and client costs. [ 2 ] While I agree with the ultimate outcome of the Master’s decision regarding

summary judgment, I do so for different reasons. The Master concluded that the Defendants’ loans were term loans. I find that they are demand loans. While both the Master and I agree that the Plaintiff’s actions with respect to the Defendants’ unpaid loans were commenced within the applicable limitations period, we arrive at our conclusions differently due to our dissimilar characterization of the nature of the Defendants’ loans. The Master and I agree that the Plaintiff is entitled to its solicitor and client costs. II.

Standard of Review [ 3 ] An appeal from a Master’s decision is de novo and the standard of review is correctness ( Bahcheli v Yorkton Securities Inc. , 2012 ABCA 166 at para 12 ). No deference is owed to a Master’s decision. [ 4 ] Where the appeal from the Master’s decision involves the same record and arguments, I may frame my reasons with reference to the Master’s decision where I agree with them ( HOOP Realty Inc. v Emery Jamieson LLP , 2020 ABCA 159 at para 41 ). III. Legal Test for

Summary Judgment [ 5 ]

Summary judgment may be granted where there is no genuine issue requiring a trial and where the court can reach a fair and just determination based on the evidence before it. The “no genuine issue” should be assessed according to what is procedurally fair rather than by weighing the merits of the parties’ respective positions. A court is not precluded from granting

summary in the face of contested facts or conflicting evidence. ( Hannam v Medicine Hat School District No. 76 , 2020 ABCA 343 at para 161 ). [ 6 ]

Summary judgment is appropriate where the record allows the court to make the necessary findings of fact, apply the law to those facts, and arrive at a just result in an expeditious way ( Weir-Jones Technical Services Incorporated v Purolator Courier Ltd ., 2019 ABCA 49 at para 47 ; Hannam at paras145-161). [ 7 ] In this case the burden rests on the Plaintiff to show that there is no defence to the claim and that there is no genuine issue requiring trial. The Plaintiff must prove the factual elements of the case on a balance of probabilities. If it cannot do so, the Plaintiff’s application fails.

The Defendants must demonstrate that the record, facts, and law preclude a fair, just and final disposition. If the Defendants can prove that there is a genuine issue requiring trial such as where there is a dispute on material facts or there are questions of credibility or evidentiary gaps, then

summary judgment should not be granted ( Weir Jones at para 35). [ 8 ] Finally, on an application for

summary judgment, each party must put its best foot forward. The focus is on the actual evidentiary record available to the judge rather than on speculation of what might “turn up in the future” or speculation about whether a party can produce a “better” record should the matter proceed to trial ( Weir-Jones at paras 37, 39). [ 9 ] In determining whether

summary judgment is appropriate in this case, I consider the following questions ( Weir-Jones at para 50):

a) Can I fairly resolve the dispute on a

summary basis notwithstanding the conflicting evidence before me?

b) Has the Plaintiff satisfied me that there is “no defence” and that there is no genuine issue requiring trial?

c) Have the Defendants demonstrated that there is a genuine issue that requires a trial?

d) Does the state of the evidentiary record give me sufficient confidence that

summary disposition is appropriate in the circumstances? [ 10 ] In their written submissions before the Master, the Defendants conceded that this matter could be dealt with summarily. I agree. IV. The Facts [ 11 ] In 2007, Messrs. Jespersen, Devlin and Macaulay were employed by Enseco Energy Services Corp. (“Enseco”) in various senior-level positions. [ 12 ] That year, Enseco and the Plaintiff devised a plan for its senior personnel to participate in a management share purchase plan (the “Plan”).

The gist of the Plan was that eligible employees would obtain a loan from the Plaintiff and, in exchange for paying the loan amount to Enseco directly, would receive Enseco shares which corresponded to the amount of their loan. [ 13 ] The details of the Plan were first outlined in an interoffice memo from Mr. Hawkins, Enseco’s Chief Executive Officer in July, 2007. The memo identified the eligible employees and their qualifying participation amount. The memo includes the following details: a. The plan is at the option of the employee; b.

The employee takes a personal loan through HSBC to buy shares of Enseco in the open market;

c. The company does not guarantee the loan; d. HSBC holds the shares as security against the loan; e. Enseco covers the interest payments on the loan for a period of up to 5 years as long as the participant is an employee of Enseco; f. The interest payments are a taxable benefit for tax purposes. [ 14 ] Eligible employees were sent a letter from Mr. Hawkins in September, 2007, which contained a similar description of the Plan. The employees confirmed their participation in the Plan by signing and returning the letter. [ 15 ] Messrs.

Devlin, Jespersen and Macaulay informed Enseco that they wished to participate in the Plan. Messrs. Jespersen and Devlin were eligible to participate in the Plan up to $250,000.00 while Mr. Macaulay’s participation amount was $125,000.00. [ 16 ] The Defendants were provided with details regarding the loan agreements in the Plaintiff’s Offer Sheet which stipulates: Repayment: On demand, until such time, Interest only, paid monthly for 1 st 2 years. Annual principal repayments for remaining 3 year term; ie. A $300,000 loan will require $100,000 principal repayment per annum in order to retire the loan in full.

Maximum amortization, 5 years Repayment of this loan may be made at any time without penalty Security: Statement of Disclosure and Promissory Note Requirements: Employees are to provide: Personal Financial Statement/Loan application Confirmation of income [ 17 ] Further details of the loan obligations are set out in the Plaintiff’s loan documents each Defendant signed, being a Statement of Disclosure and Promissory Note. [ 18 ] The Statement of Disclosure is titled “Statement of Disclosure – Personal Demand Loan” and contains the following provisions: a.

Clause 6: provided the estimated cost of borrowing, calculated using a rate of interest of 1% plus the Plaintiff’s prime rate of 6.25% per annum, of $9,062.50. b. Clause 7: “The Loan is payable on demand.” For the purpose of calculations in the statement, such as payment amount and cost of borrowing, the following were used: 1. term of loan 12 months 2. Amortization 12 months a. Clause 8: “Based on the interest rate in item 6, the Loan is payable as follows assuming the Loan is not demanded before the Maturity Date and the interest rate and all other terms and conditions remain the same: b.

Interest only from year 1-3.” c. Clause 13: “In the event the Borrower default in making any payment of interest as provided above or in making repayment of the principle on demand by the Bank, the Borrower will be required to pay all reasonable expenses incurred by the Bank in collecting the Loan or protecting or realizing on any security held by the Bank for the Loan.

Those reasonable expenses include, without limiting the generality of the foregoing, all legal expenses incurred by the Bank on a solicitor-client basis.” [ 19 ] The Promissory Note is titled “Promissory Note – Demand – Floating Prime Rate” and specifies that the rate of interest payable on the loan is 1% plus the Plaintiff’s prime rate (which at the time was 6.25%). [ 20 ] Each of the Defendants deposed that they: a. executed the Statement of Disclosure and Promissory Note; b. understood that the Promissory Note was simply proof of the loan and part of the Plan; c. did not receive a copy of the executed Statement of Disclosure or Promissory Note; d. had no further involvement with the Plaintiff relating to the Plan after 2007; e. understood they had to report and pay income tax on the shares which had been issued to each of them but otherwise had no further involvement with the Plaintiff with respect to the Plan;

f. did not make any interest or other payments to the Plaintiff, did not receive any statements from the Plaintiff regarding the status of loan payments, and otherwise, did not receive any information from the Plaintiff regarding interest, any changes in the cost of borrowing or the loan balance; and g. understood that Enseco would be responsible to the Plaintiff for full re-payment of the loans. [ 21 ] Each of the Defendants understood that until such time as their loans were fully repaid, Enseco would be responsible for making the required interest payments.

The Defendants would have received a T4 slip annually which reported Enseco’s interest-only payments as a taxable benefit. [ 22 ] Mr. Evans, the Plaintiff’s corporate representative, deposed that he believes that the original intention of the parties was that the loan would be repaid over five years with interest only payments being made over the first two years. [ 23 ] It does not appear that there were any further developments until 2012. In July, 2012, Mr. Devlin was appointed Enseco’s President and Chief Executive Officer. That summer, Mr.

Jespersen became Enseco’s Vice-President of Operations, reporting directly to Mr. Devlin. At the time, Messrs. Devlin and Jespersen made up two of Enseco’s four-member executive team. [ 24 ] In 2012, Mr. Devlin entered into discussions with Enseco whereby Enseco contemplated repaying the balance of Mr. Devlin’s loan as a way to entice him to stay. While Mr. Devlin signed the agreement, it does not appear that it was ever finalized by Enseco. [ 25 ] On June 28, 2012, Mr. Jespersen received an e-mail from Mr. Scott Ratushny, Enseco’s Chairman of the Board of Directors. Mr.

Ratushny indicated that as part of Enseco’s management bonus scheme, Enseco would re-pay its employees’ loans over the next two and a half years. Enseco’s Audit Committee had resolved in its May, 2012, meeting that the loans of participants in the Plan would be re- paid by Enseco in equal installments for the years 2012, 2013, and 2014, and that Enseco would also pay the withholding tax for each of those years. Messrs. Devlin and Macaulay were aware of the Audit Committee’s resolution.

It does not appear that the Audit Committee’s resolution was ever fully ratified by Enseco’s Board of Directors or was otherwise finalized. Enseco did not repay the Defendants’ loans in accordance with the Audit Committee’s draft resolution. [ 26 ] In 2013, Mr. Macaulay received a renewal letter from the Plaintiff indicating that the Macaulays’ loan had matured on February 18, 2013, and that the balance of the loan, which then stood at $125,000.00 was being renewed for a further 6 months at an annual interest rate of 4% with interest-only payments accepted. Mr.

Macaulay received similar renewal letters in 2014 and 2015, which extended the loan for further 6-month terms. Mr. Macaulay did not contact the Plaintiff to make inquiries regarding the terms of his loan renewal or why his loan was being renewed. Throughout, he believed that Enseco was taking care of the Macaulays’ loan re-payment. [ 27 ] On December 22, 2014, Mr. Devlin e-mailed Mr. Ratushny to inquire whether, instead of Enseco paying off the Defendants’ loans as per Enseco’s earlier proposal, Enseco would be willing to issue the Defendants with additional shares. Mr.

Devlin’s offer seems to have arisen because at the time, Enseco was experiencing financial difficulties and did not have the cash to pay off the Defendants’ loans. In his e-mail, Mr. Devlin states: “[o]f course, [the Defendants] would have to repay the corresponding portion of the...loan at the time of the transaction or make necessary arrangements”. Mr. Ratushny replied that he was not favourable to the idea but acknowledged that “these loans need to be addressed and dealt with.” [ 28 ] In June, 2014, Mr. Wade Schuler, the Plaintiff’s relationship manager with Enseco, learned that Mr.

Devlin had apparently advised one of the Plaintiff’s employees that Enseco was going to pay out the Defendants’ loans and that Mr. Ratushny had arranged the necessary financing. [ 29 ] In September, 2015, Mr. Devlin received a similar renewal letter to the ones that Mr. Macaulay received. Mr. Devlin says that he inquired what the status of the Defendants’ loans was but was informed by Mr. Schuler that the Defendants’ loans had been referred to the Plaintiff’s special credit group. [ 30 ] Enseco made its last interest-only payment with respect to the Defendants’ loans in September, 2015.

Since then, no further payment with respect to the Defendants loans has been made. In October, 2015, Enseco was the subject of a Receivership Order which rendered the Defendants’ Enseco shares worthless. [ 31 ] On November 20, 2015, Mr. Devlin sent a letter to Enseco’s Receiver demanding that Enseco repay the Defendants’ loans in full. He requested that the Receiver provide him with a breakdown of the interest payments that Enseco had made and information about the renegotiation of the Defendants’ loans. In his letter, Mr.

Devlin acknowledged that Enseco’s interest only payments constituted a taxable benefit because the Defendants had been paying taxes on these amounts over the course of their loans: In addition, the Borrowers [the other shareholders] have always been taxed on the interest payments made by Enseco on the loans as a taxable benefit, which has created losses for me personally. To date, the tax consequences that I have incurred as a result of the loan attributable to me amount to $30,000.00... [ 32 ] Mr. Devlin says that he did not receive a reply. [ 33 ] In May, 2016, the Plaintiff advised Mr.

Devlin that it did not have statements of the loan transactions going beyond 7 years and that: [t]here are no documents pertaining to the renewal of the loan as the loan was always auto-renewed by HSBC. The client signature was not required as the terms do not change when we auto-renew. [ 34 ] In August, 2016, the Defendants received the Plaintiff’s demand letters for full re-payment of their loans. [ 35 ] The Plaintiff commenced separate actions for judgment of the unpaid loans: in September, 2016, in respect of the Macaulays; and in October, 2016, in respect of Messrs. Devlin and Jespersen.

V. Analysis [ 36 ] The Defendants argue that the Plaintiff’s actions against each of the Defendants are not suitable for

summary judgment and that the following genuine issues should proceed to trial: i. What were the terms of the Defendants’ loans? ii. Do the Defendants have a limitations defence? iii. Should the Plaintiff be granted its solicitor client costs? [ 37 ] This is a relatively straightforward debt action. There is no conflicting evidence. The Plaintiff has satisfied me on a balance of probabilities that the Defendants do not have a defence.

I cannot identify a single genuine issue that requires a trial. [ 38 ] The evidentiary record is virtually identical now as it was before the Master (except for a supplemental Affidavit for each Defendant filed subsequent to the Master’s decision that speaks to their knowledge of the Audit Committee’s resolution and the draft minutes of the Audit Committee’s 2012 meeting). I therefore find that the record is sufficiently complete for a determination on a

summary basis. i. What Were the Terms of the Defendants’ Loans? a.

Did the Defendants’ Loans Comply With the Applicable Statutory Requirements? [ 39 ] The Defendants argue that the Plaintiff has failed to prove how the Statement of Disclosure that it says forms part of the loan documents complies with the statutory requirements found in the Cost of Borrowing (Banks) Regulations , SOR/2001-101 (the “ Regulations ”). [ 40 ] Section 6(2) of the Regulations state that “a disclosure statement may be a separate document or may be part of a credit agreement or an application for a credit agreement”. [ 41 ] Section 6(3) of the Regulations state that the information disclosed in a disclosure statement may be based on an estimate if the estimate is reasonable and the information disclosed by it is not known or is identified to the borrower as being an estimate. [ 42 ] In this case, the loans were demand loans.

They did not fix a future date for repayment and there was no agreement that the loan would be paid through installments. Clause 7 of the Statement of Disclosure used a term loan and amortization period of 12 months to illustrate what the total cost of borrowing would be annually at the variable rate of interest at the time.

Clause 6 provided an estimate of what the borrowing cost/annum was at the rate of interest as it then currently was. [ 43 ] In my view, the Statement of Disclosure complies with the requirements of section 6(3) of the Regulations . [ 44 ] In any event, even where there is technical non-compliance with the strict requirements of the Regulations ,

section 988 of the Bank Act , S.C. 1991, c. 46 states that unless otherwise specified, a contravention of any provision of the Act or Regulations does not invalidate a contract in contravention of the provision. b. What Expectations Did the Parties Have Regarding the Terms of the Defendants’ Loans? [ 45 ] The Defendants further claim that they believed their loans were for a fixed, five-year term that Enseco would fully repay on the loans’ maturity.

The Master agreed, concluding at paragraph 21 of his decision (reiterated further at paragraph 22) that “...it appears that both [the Plaintiff] and the [D]efendants expected a 5 year term. The [Bank’s] deponent confirmed this in his testimony.” [ 46 ] In my view, this belief was not one that the parties could reasonably have held. [ 47 ] There is nothing in the terms of the details about the Plan that the Defendants received from Enseco or the terms outlined in the Plan itself, the Offer Sheet or the Statement of Disclosure and Promissory Note that stipulate that their loans are other than a demand loan.

The Offer Sheet states that Enseco would agree to make interest payments for up to 5 years but otherwise does not make any representation that the loan would be retired by Enseco at the end of 5 years. The Plan expressly states that the loan is repayable “ on demand ”. [ 48 ] The loan documents, comprising the Statement of Disclosure and the Promissory Note explicitly reference the loans as being a demand loan. The Statement of Disclosure is titled “Statement of Disclosure – Personal Demand Loan ” and in clause 7, it is confirmed that “ the Loan is payable on demand ”.

The Statement of Disclosure does not specify the loans’ maturity date. [ 49 ] The Promissory Note is titled “Promissory Note – Demand – Floating Prime Rate”. [ 50 ] I cannot find any reference in either of the loan documents that stipulates that the term of the loan, or its maturity date, is five years. The Statement of Disclosure specifically does not contain a maturity date and confirms in clause 7 that its term and amortization are 12 months.

The Promissory Note does not reference any date on which repayment of the loan was due. [ 51 ] The Defendants do not state how they formed their belief that their loans would be fully repaid within five years. I cannot locate any correspondence from Enseco or the Plaintiff to that effect. There is no evidence that the Defendants discussed their loans with

anyone, asked any questions about the loan terms, or confirmed their understanding with anyone as to what their loan obligations were. As far as I can tell, neither the wording of any of the documents that advertised the Plan nor the loan documents themselves would lead a reader to reasonably believe that the loan was a term loan that matured in 2012. [ 52 ] Further, I find that the Defendants’ conduct clearly evidences that they did not have a genuine belief that their loans were for a fixed five-year term, nor were they reasonably led to believe that.

The Defendants knew that the Enseco had not repaid their loans in 2012, that Enseco continued to service the loans beyond 2012, and that the loans remained outstanding when Enseco was placed in receivership. [ 53 ] Mr. Devlin was aware of Enseco’s proposed retention and repayment agreement in 2012, and the Defendants were aware of the Audit Committee’s resolution.

As senior personnel of Enseco, the Defendants ought to have kept themselves apprised of the Enseco Board’s ratification of the Audit Committee’s resolution, and they knew or would reasonably have known that the resolution was never fully ratified. [ 54 ] Had the Defendants reasonably believed that their loans matured in 2012, I would have expected the Defendants to have made inquiries regarding the status of their loans or to have confirmed the repayment of their loans. This did not happen. The Defendants did nothing. They made no inquiries. They did not seek confirmation that their loans had matured.

They did not demand that Enseco or the Plaintiff pay out their loans in accordance with their understanding that the loans would be fully repaid in 2012. [ 55 ] I find that the Defendants turned a blind eye to what they clearly knew – that Enseco had not repaid their loans and that their loan obligations continued while Enseco made the necessary loan payments. [ 56 ] Mr. Devlin knew that the Defendants’ loans had not been retired at the end of 2014 given his discussions with Mr.

Ratushny on December, 2014, wherein he proposed that rather than have Enseco repay the Defendants’ loans , Enseco issue the Defendants with additional Enseco shares . [ 57 ] The Defendants knew that Enseco was continuing to make interest-only payments on their loans after 2012 because they received their T-4 slips that reflected Enseco’s payments as a taxable benefit. The Macaulays and Mr.

Devlin knew that their loans remained outstanding after 2012 when they received the Plaintiff’s renewal letters. [ 58 ] It is only now that Enseco is defunct and the shares are worthless that the Defendants argue a version of events regarding what they believed to be true about their loans which simply does not accord with a plain reading of the loan documents and the Defendants’ conduct. [ 59 ] I attach no weight to Mr. Evans’ testimony. [ 60 ] Mr. Evans had no personal involvement in the Plan, in discussions between Enseco and the Plaintiff, or with any of the Defendants.

He only became involved after the Plaintiff commenced its actions. While Mr. Evans deposed that “the initial intention was the loan to be repaid over five years...”, he agreed in questioning that he was not involved in any of the discussions regarding the loan arrangements in 2007-2008 when the loans were originally approved and that his only knowledge of the Enseco account was through his review of the Plaintiff’s documents. He says that he arrives at this conclusion from his review of the Offer Sheet. [ 61 ] Specifically, Mr.

Evans agrees that he cannot say which of the loan terms were discussed or agreed to by the parties. While Mr. Evans initially deposed that Enseco and the Plaintiff agreed in 2012 that the loans would be extended, he conceded in questioning that he did not know where he got this information from and further, could not confirm what the basis for his belief in this respect was. Further, Mr. Evans could not confirm whether the loans matured in 2012, or what happened with the loans from 2012 to 2015. [ 62 ] Mr.

Evans has no information regarding the discussions that took place between Enseco and the Plaintiff regarding the terms of the Plan. His only information regarding the terms of the Defendants’ loans are what the loan documents say. He did not have any dealings with any of the Defendants throughout the course of 2007-2015. He does not know what the parties intended the original term period of the loans to be. He did not become aware of the matters underlying the Plaintiff’s lawsuits until after the Plaintiffs commenced its actions. [ 63 ] Consequently, I find, contrary to the Master’s conclusions, Mr.

Evans cannot possibly have known what any of the parties intended when Enseco and the Plaintiff crafted the Plan, when Enseco proposed the Plan to its employees and when the Defendants agreed to participate. Mr. Evans’ evidence in this respect is without any factual foundation and is purely speculative. [ 64 ] Given that Mr.

Evans has no personal knowledge of the matters that are subject to this litigation, I disregard his evidence in its entirety, including what he understood the details of the Plan to be, what obligations the parties believed they had entered into and when he believed the Defendants’ loans were to have matured. His evidence adds nothing to what is clearly discernible from the documentary record and the Defendants’ conduct. [ 65 ] I disagree with the Defendants’ assertion that the evidence clashes. The Plaintiff’s evidence consists of the loan documents which I have given a plain reading to.

What the Defendants knew or ought to have known is discernible from the written record and their conduct. The Plaintiff has satisfied me that there is no defence and that there is no genuine issue requiring a trial. ii. Do The Defendants Have a Limitations Defence? [ 66 ] The Defendants assert in their written submissions that the Master erred in finding that the Plaintiff’s actions are not statute barred under the Limitations Act although their arguments derive from the Master’s conclusions that the Defendants’ loans were term loans.

I will proceed with my limitations analysis on the basis that the Defendants’ loans are demand loans. [ 67 ] The last payment made on the Defendants’ loans was for the month of September, 2015. The Plaintiff demanded payment of

the loans in August, 2016. The Plaintiff commenced its actions against the Macaulays in September, 2016, and against Messrs. Devlin and Jespersen in October, 2016. [ 68 ] The 2-year limitation period that applies in respect of a demand loan commences to run from the date when a demand for payment is made and is not met. (See for example: Sawchuk v Bourne , 2005 ABCA 382 at para 15 , affirming Sawchuk v Bourne , 2004 ABQB 344 at paras 21-23 ; David M. Gottlieb, Professional Corporation v Tymkow , 2012 ABQB 262 at paras 9 , 11; Cummings v.

Steinke & Company Realty Ltd. , 2015 ABCA 55 at para 36 ; Hunter Duckworth Holdings Ltd. v. Kamino GP Ltd. , 2014 ABQB 753 at para 12 ). [ 69 ] This is when each of the elements set out in section 3(1) (

a) of the Limitations Act , R.S.A. 2000, c.L-12 is satisfied. “Injury”, as used in section 3(1)(

a) of the Act is defined in

section 1(e)(iv) as “non-performance of an obligation...” The “injury” the Plaintiff complains of is the Defendants’ failure to make a payment on their loans when the Plaintiff made its demands. [ 70 ] Based on the foregoing, the Plaintiff commenced its actions within a two-year period of having made a demand to the Defendants for payment. The Defendants’ limitation defence fails. I cannot discern from the Defendants’ arguments a genuine issue that requires a trial. iii.

Should the Plaintiff be Granted its Solicitor and Client Costs? [ 71 ] I agree with the Master’s decision that the Plaintiff should be awarded its solicitor and client costs of the proceedings.

The Defendants did not address this issue in much detail in their written submissions before me but I have reviewed the parties’ various submissions before the Master. [ 72 ] The Defendants’ agreement to pay the Plaintiff’s solicitor and own client costs is expressly stipulated in Clause 13 of the Statement of Disclosure which states: In the event the Borrower default in making any payment of interest as provided above or in making repayment of the principle on demand by the Bank , the Borrower will be required to pay all reasonable expenses incurred by the Bank in collecting the Loan or protecting or realizing on any security held by the Bank for the Loan.

Those reasonable expenses include , without limiting the generality of the foregoing, all legal expenses incurred by the Bank on a solicitor-client basis . [emphasis is mine] [ 73 ] I agree with the Master that the Statement of Disclosure comprised one of the loan documents that each of the Defendants executed.

The Statement of Disclosure imposed upon each of the Defendants a covenant to pay the Plaintiff’s solicitor and client costs in the event of default. [ 74 ] The issue of the Defendants having to pay the Plaintiff’s solicitor and client costs is not a triable issue. [ 75 ] The obligation arises from a reading of the plain language of Clause 13 of the Statement of Disclosure.

Section 18(

a) of the Regulation permits a borrower to impose charges for the recovery of its costs, reasonably incurred for legal services to collect payment. [ 76 ] I have already concluded that the Statement of Disclosure forms part of the loan agreement that each of the Defendants entered into and I cannot identify anything that occurred since the Defendants executed the Statement of Disclosure that would have amended or displaced the Defendants’ obligations in this respect. VI. Disposition [ 77 ] The Defendants’ appeals are dismissed in their entirety. [ 78 ] The Plaintiff is granted

summary judgment against each of the Defendants. [ 79 ] The Defendants shall pay the Plaintiff’s assessed solicitor and client costs. [ 80 ] If the parties are unable to reach an agreement with respect to costs, they may contact me to arrange for further submissions. Heard on the 26 th day of March, 2021 Dated at Calgary, Alberta this 27 th day of May, 2021. O.P. Malik J.C.Q.B.A. Appearances:

Russell N. Avery and Anthony L. Dekens for the Plaintiff, HSBC Canada Bank Rinus De Waal and Karolina Kluz for the Defendants, Kim Jespersen, Kent Devlin, John Macaulay and Kayla Macaulay