business development bank of canada PLAINTIFF AND: gary rideout FIRST DEFENDANT AND: jOHN MEANEY SECOND DEFENDANT AND: jOAN rideout THIRD DEFENDANT ___________________________________________________________________, 2012 NLTD 44

IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR TRIAL DIVISION ( GENERAL ) Citation : Business Development Bank of Canada v. Rideout , 2012 NLTD(G) 44 Date : 20120 313 Docket : 201001G4675 BETWEEN: business development bank of canada PLAINTIFF AND: gary rideout FIRST DEFENDANT AND: jOHN MEANEY SECOND DEFENDANT AND: jOAN rideout THIRD DEFENDANT ___________________________________________________________________ Before: The Honourable Madam Justice Deborah E. Fry ___________________________________________________________________ Place of Hearing: St. John’s , Newfoundland and Labrador Date(

s) of Hearing: February 29, 2012

Summary: The Business Development Bank of Canada (BDC), applied for a

summary trial pursuant to Rule 17A of the Rules of the Supreme Court of its claim under a personal guarantee against the third defendant. The court found it appropriate to proceed under Rule 17A and found that the plaintiff proved the debt and the personal guarantee. The third defendant was unsuccessful in establishing undue influence or that the BDC was required to provide independent legal advice. The court also determined that the third defendant had not established the defence of non est factum and therefore was unable to avoid personal liability under the guarantee.

Appearances: John Hogan Appearing on behalf of the Plaintiff No Appearance On behalf of the First Defendant No Appearance On behalf of the Second Defendant

Joan Rideout Appearing on her own behalf Authorities Cited: CASES CONSIDERED: Royal Bank v. Incoretec Inc., 2007 NLTD 211; Marco v. Newfoundland Processing Ltd. (1995), (NL SC), 130 Nfld. & P.E.I.R. 317 (N.L.S.C.(T.D)); Sysco Canada Inc. v. C.J.M. Service Ltd., 2011 NLTD(G) 46;Burin Peninsula Community Development Corp. v. Grandy, 2010 NLCA 69; Freake v. Freake, 2004 NLCA 39; Bank of Montrealv. 1480863 Ontario Inc. (2007), 156 A.W.C.S. (3d) 1140 (Ont. Sup. Ct.); Marvco Color Research Ltd. v. Harris, (SCC), [1982] 2 S.C.R. 774. STATUTES CONSIDERED: Judgment Interest Act, R.S.N.L. 1990, c. J-2.

RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D, r. 17A. REASONS FOR JUDGMENT Fry, J.: INTRODUCTION [1] The plaintiff, the Business Development Bank of Canada (BDC), applied for a

summary trial pursuant to Rule 17A of theRules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D of Newfoundland and Labrador of its claim under a personal guaranteeagainst the defendants. [2] The facts, which form the basis of the plaintiff's claim, were set out in a Statement of Claim filed September 13, 2010, havenot been disputed and are as follows: 1. Pursuant to the letter of offer dated July 13, 2007, the plaintiff granted to TimberStone Design Company Inc. (the debtor company), aloan in the principal amount of $50,000 with interest thereon at the plaintiff's floating base rate +3.7% (the “loan”). 2.

Pursuant to a guarantee dated July 18, 2007, the first, second and third defendants agreed to guarantee the indebtedness of the debtorcompany to the plaintiff on a joint and several and unlimited basis, including accrued interest and expenses as set out therein (the“guarantee”). 3. The debtor company is in default of its obligations to the plaintiff, by reason of its failure to make payments on the loan when samebecame due. 4. By letters of demand, the plaintiff demanded payment from the defendants pursuant to the guarantee in relation to the indebtedness ofthe debtor company to the plaintiff under the loan. 5.

No payments have been made by either the debtor company or the defendants in respect of the loan. BACKGROUND [3] The Statement of Claim was served on the first and third defendants.

The second defendant cannot be located by the plaintiffand has not been served. [4] On October 18, 2010 a Defence to the Statement of Claim was filed by Joan Rideout, the third defendant. [5] On November 1, 2010, default judgment was entered against Gary Rideout, the first defendant. [6] The defence of the third defendant who is self represented, does not deny the existence of the loan or the guarantee or thatthere was a failure to repay the loan. Rather, the defence states: “undue influence”.

The defence also references an unnamed “case” andincludes the following quotation: “Undue influence having occurred upon his being required to execute a guarantee on closing which had not been required in theagreement to finance without being offered an opportunity to properly assess the merits of the transaction.”

“‘The guarantee was executed under undue influence in the failure of the Plaintiff to provide independent legal advice when counselacted for the Plaintiff in the execution of the guarantee (that lawyers firm having previously acted for Mr.

Grandy and his company aswell) and there existed a legal obligation of the Plaintiff to advance funds without a personal guarantee.” [7] It appears from the pleadings that there was no disagreement between the plaintiff and the third defendant with respect to thematerial facts of the matter before the court with the exception of a determination of whether there was “undue influence in the failure ofthe plaintiff to provide independent legal advice” as set out in the defence of the third defendant. [8] The application for

summary trial was called in court on August 30, 2011, following service on the first and third defendantsand again on October 5, 2011, with no attendance by either of the served defendants. [9] On November 9, 2011 when the matter was once again called in court, the solicitor for the plaintiff advised the court thatthe third defendant had contacted him and was looking for a postponement as she may wish to seek legal counsel.

The matter wasenlarged to December 14, 2011 for hearing to allow the third defendant to seek legal advice as well as to file an affidavit setting out theparticulars of her claim of undue influence. [10] On December 14, 2011 the matter was again called and the court advised that an e-mail had been received from the thirddefendant. Counsel for the plaintiff advised that he had not received the e-mail correspondence which was then read into the record.

The third defendant advised the court by e-mail on December 13, 2011 that she was a post secondary instructor with a teaching schedulethat did not allow her to participate in the hearing even by telephone and that she was still trying to arrange for legal advice. The courtset the matter over to January 3, 2012. Ms. Rideout was advised that she could appear by telephone. [11] On January 3, 2012 counsel for BDC and Ms. Rideout (by telephone) appeared. Ms. Rideout confirmed that she had receivedthe affidavits filed on behalf of BDC as well as the memorandum of fact and law. Ms.

Rideout confirmed that her defence was undueinfluence. She was advised by the court that she was required to put the facts on which she relied before the court by way of affidavit. Ms. Rideout indicated that she was still trying to get legal representation. The court advised Ms. Rideout that she could appear by videoconference and set February 29, 2012 as the date for the hearing of the

summary trial application. [12] Ms. Rideout filed an affidavit on February 1, 2012. The matter proceeded before me on February 29, 2012, at which time bothparties appeared; Ms. Rideout by videoconference from the Gander courthouse. [13] Ms. Rideout was self represented and indicated that she was proceeding without a lawyer. She told the court that she and thecompany had previously been represented by legal counsel but the costs had become too high and she was not in a position to engagelegal counsel. The court inquired as to whether she had considered Legal Aid.

She advised the court that she had made contact, obtainedapplication forms but in a preliminary discussion with them, determined because of her work and salary, she would not likely qualify. She expressed a desire to proceed without counsel. The court inquired as to whether she wished to cross-examine any of the deponentson their affidavits and she declined, indicating she was prepared to proceed by way of

summary trial. ISSUES [14] The issues before me are: 1. Is it appropriate for this matter to proceed by way of

summary trial pursuant to Rule 17A? 2. If so, has the plaintiff established that the third defendant is liable under the terms of the personal guarantee? 3. Has the third defendant established that there was any undue influence or requirement for independent legal advice?

Summary Trial pursuant to Rule 17A [15] Rule 17A sets out when and under what circumstances an application for

summary judgment can be granted without thenecessity of a full trial. The Rule also sets out the types and methods of adducing evidence in a

summary trial. [16] In Royal Bank v. Incoretec Inc., 2007 NLTD 211, Hoegg, J. (as she then was) addressed the general principles and objectivesof the Rule 17A when she stated: 6. Marco Ltd. v. Newfoundland Processing Ltd. (1995), (NL SC), 130 Nfld. & P.E.I.R. 317 (Nfld. T.D.) a decisionof the NLTD by Green, J. (as he then was) sets out the principles governing

summary trial pursuant to Rule17A of the Rules of theSupreme Court of Newfoundland and Labrador. Of note is the general objective of Rule17A as described by Green, J.: The object of Rule17A is to promote the general objective of the Rules of Court of providing an expeditious and inexpensivedetermination of proceedings on their merits by screening out claims that cannot survive the good hard look.

7 The burden is on RBC to establish that either there is no genuine issue for trial, or if there is a genuine issue for trial, the recordbefore the court enables the court to decide the issue within a sufficient "comfort level" and that it would not be unjust to the respondingparty for the court to do so. The procedure is well described at para. 76 of Marco, (supra). [17] In addition to the burden placed on the party applying for

summary trial to show that there either is no genuine issue for trial orthat if there is a genuine issue for trial, the court is able without injustice to any party, find the facts necessary to decide the issue, Green,J., in Marco v. Newfoundland Processing Ltd. (1995), (NL SC), 130 Nfld. & P.E.I.R. 317 (N.L.S.C.(T.D)), wenton to state at paragraph 76 principle 11 that an applicant’s failure to set out evidence “in a concise and organized way that demonstratesthe issue in dispute and why they can or cannot be dealt with by way of

summary trial” might also lead a court to refuse to hear anapplication for

summary trial. [18] It is clear that BDC has the burden of establishing the evidentiary basis for the claims it advanced in its Statement of Claim. According to principles 3, 4, and 5 found at paragraph 76 of Marco it must set out an organized set of facts by way of documentary andwritten evidence that constitute a proper foundation for its claim. [19] It is my finding that BDC has established the loan through the affidavit and documentary evidence of the account manager,BDC, Grand Falls-Windsor, Mike Ball and Dale Rideout, Manager of the BDC Branch Grand Falls-Windsor.

The affidavits set out thatthe loan for TimberStone Design Group, Inc. was authorized by the BDC Underwriting centre and a Letter of Offer was sent July 13,2007 by courier to TimberStone to the attention of Joan Rideout. The Letter of Offer (the loan) which was signed by the threedefendants on July 18, 2007 contained the following provision: “Security” 1. Joint and Several Guarantee of Mr. Gary Rideout and Ms. Joan Rideout and Mr. John Meaney for 100% of the outstanding balanceof the loan.

The guarantors agree that they are personally responsible for the payment of the commitment, standby and legal fees as perthe Letter of Offer. [20] It is my finding that BDC has established the guarantee through the affidavit and documentary evidence of Mr. Ball. Theguarantee is a four-page document headed up in large print with the word “GUARANTEE”. The guarantee on its first page recites theguarantors as the three defendants, the creditor as BDC, and the debtor as TimberStone Design Group, Inc.

It is signed on July 18, 2007by the three defendants on a line marked “guarantor” followed by a second line “name of guarantor,” where each guarantor printed theirname. [21] It is also my finding that BDC has established the default of the debtor and that demand letters have been sent as required bythe loan agreement and the guarantee. This is been established through the affidavit and documentary evidence of Bernice LeBlanc,account manager with BDC in Moncton, New Brunswick. The first demand letter dated April 5, 2010 was sent by registered mail.

Afurther demand letter was sent by the law firm, on behalf of its client, BDC on June 8, 2010 by both registered and regular mail. Thiswas established by the affidavit of Lisa Daly, solicitor with Cox and Palmer.

Each demand letter referenced the default, the balance due,the interest accumulating and the basis upon which it was calculated, a demand for payment and was sent in accordance with paragraph 7of the Guarantee, which states, “A demand is effectually made when the letter is posted to the address of the Guarantor last known to thebank.” [22] The affidavit of Bernice LeBlanc also establishes that as of December 14, 2011, the amount outstanding on the loan was$50,727.38. [23] It is my finding that the evidentiary basis for BDC’s claim under the loan and personal guarantee has been brought before thecourt in an organized and coherent fashion and establishes both the debt and the default.

Furthermore, the third defendant does not takeissue with nor has she denied any of the plaintiff's allegations either in her pleadings or in argument before the court. The only issue forthe court to determine is the validity of the defence of “undue influence” as elaborated in the third defendant's affidavit. [24] The plaintiff submitted that there was a genuine issue for trial and that the record before the court was sufficient for the courtto determine the issue.

In Marco at paragraph 76, principle 13, Green J. discussed the evidentiary record necessary to enable the court todetermine a genuine issue. “… so long as the chambers judge is satisfied that there is sufficient evidentiary backdrop against whichfindings of fact can be made and in which there are no material unanswered questions, he or she should be able to adjudicate on themerits.” [25] The court must also be satisfied that it would not be unjust to decide the issues by

summary trial. Green, J. commented on thisrequirement at paragraph 76 principle 15 of Marco as follows: 15. The requirement that the judge must also be satisfied that it is not "unjust" to decide the issues on the application reinforces thenotion that the chambers judge should be satisfied that the court has a sufficient handle on the facts to make an informed decision. Thus,if it is clear that there is other material evidence available which might materially affect the result and the chambers judge concludes thathe or she would not be deciding the case against the true factual background, he or she might well conclude that it would be unjust todeal with the matter by way of

summary trial. While a party has an obligation to put his or her best foot forward, there might well be avalid explanation for the absence of such other evidence, for example, if the information is in the hands of the other party. In addition,other factors that would have to be considered by the court to determine the "justice" of proceeding would be: (

a) the amount involved; (

b) the complexity of the matter; (

c) its urgency;

(

d) any prejudice likely to arise by reason of delay; (

e) the cost of taking the case forward to a conventional trial in relation to the amount involved; (

f) the course of the proceedings to date. [ 26 ] I am satisfied that it would not be unjust to proceed by

summary trial. BDC has complied with all of the requirements identified by Green, J. in Marco for a

summary trial. They have put forward a sufficient evidentiary basis to prove all of the elements of the cause of action. The third defendant has filed an affidavit setting out the particulars of her claim of undue influence. The third defendant has been granted several postponements to obtain legal advice and has determined now to proceed on her own. The matter is not complex and the third defendant has not suggested that she is prejudiced in any way in proceeding by way of

summary trial. The issue that the defendant puts forward that there was undue influence by means of a lack of independent legal advice is a discrete legal issue and can be determined on the affidavit evidence before the court. Liability under Personal Guarantee [ 27 ] I am satisfied, on the affidavit and documentary evidence previously referred to, that the loan and the guarantee have been established and that BDC has notified the debtor and the guarantors of the default and made appropriate written demands for payment in compliance with the loan and guarantee.

The burden now shifts to the third defendant to establish a defence which would relieve her of personal liability on the guarantee she signed. Undue Influence and Independent Legal Advice [ 28 ] The affidavit of Ms. Rideout sets out the circumstances under which TimberStone sought the loan from BDC. She described a shortfall in the funding arrangements with two lending agencies that the company was dealing with for business start up funds.

She described a conversation with Mike Ball, who assured her that his organization, BDC, would be able to assist them with a $50,000 working capital loan without any difficulties. In her affidavit, she states that Mr. Ball expedited the meeting and the loan agreement for TimberStone in order to assist the company complete the process with the second lender so it could draw down the funds to purchase the property. She further stated that at the meeting with Mr. Ball on July 18, 2007, she and Mr. Rideout were presented with various documents to sign. She stated that Mr.

Ball said they were routine and would meet the criteria set out by the second lender. She goes on to state that at no time did Mr. Ball advise TimberStone that its directors could or would be held individually liable for the proceeds of the loan, nor did he advise TimberStone to seek counsel from their accountant or lawyer for document clarification. [ 29 ] In Sysco Canada Inc. v. C.J.M. Service Ltd. , 2011 NLTD(G) 46, Fowler, J. in addressing the law of undue influence adopted the following statement from the Court of Appeal in Burin Peninsula Community Development Corp. v. Grandy , 2010 NLCA 69 : 42.

In relation to “undue influence” Harrington, J.A. stated at paragraph 27: By contrast, the equitable doctrine of undue influence is rooted in the concepts of trust and dependency by one party upon another, the latter seeking to bind the former to an obligation. The concept of unequal bargaining power underlies the analysis (see Waddams, supra, pp. 381-384). In some cases a fiduciary relationship may be identified which gives rise to a presumption of undue influence which may be required to be rebutted. Examples of such relationships may involve solicitor-client, doctor-patient or guardian and child.

However, the law of equity generally has not recognized a fiduciary relationship and presumption of influence in the case of commercial lender and borrower. This latter situation is consistent with the notion that ordinary business pressures would not constitute either economic duress or undue influence. The trial judge acknowledged in his reasons that the case was a difficult one to decide within the framework of the law of undue influence (Trial Decision, para. 42). I agree with his assessment. There was no long standing relationship between the Grandys and the Corporation.

Thus, there was no factual basis for a finding of a relationship of trust and dependency as an exception to the general rule that a relationship between a commercial lender and a borrower does not constitute a fiduciary relationship. [ 30 ] In this case, Ms. Rideout in oral submissions tried to describe the undue influence in more detail. She said that she was not pressured by anyone to sign the loan or the guarantee but that the financial pressures that the company was under including the closing of the purchase of the property sale made it necessary to acquire the money quickly.

She advised the court that she knew TimberStone was getting a loan but that she did not anticipate that the directors would have any personal responsibility. There was no factual basis to find that the relationship was anything other than that of a commercial lender and borrower. [ 31 ] In Sysco , Fowler, J. determined at paragraph 44: On the evidence it does not appear to be sufficient to support the argument that the defendant acted against their own best interest due to undue influence. There simple [sic] was no undue influence on them.

The ordinary pressures and stresses of business at times create circumstances were choices are limited, however, in this case these stresses do not amount to undue influence. (Emphasis added.) [ 32 ] In Freake v.

Freake , 2004 NLCA 39 , Cameron J.A. cited the following definition of undue influence at paragraph 40 : “Undue influence has been defined as ‘some unfair and improper conduct, some coercion from outside, some over reaching, some form of cheating, and generally though not always some personal advantage obtained by (the guilty party).’ (Citations omitted)… Any improper use of one contracting party of any form of oppression, coercion, compulsion or abuse of power or authority for the purchase [sic] (purpose) of obtaining the consent of the other party may result in avoidance of the resulting contract on the ground of undue influence.

Fridman, at 301.” [ 33 ] In this case the third defendant states that she was not advised by BDC that she was signing a personal guarantee and that BDC should have advised her to seek accounting or legal advice. The evidence before the court is that the third defendant is a post secondary

instructor and the assessment by the bank prior to approving the loan concluded that the company had the “required credit criteria, areasonable business plan and management experience in its planned business venture.” Ms.

Rideout indicated that during this processshe and the company had a relationship with a lawyer who was providing business and financial advice until the cost of those legalservices became prohibitive. [34] The third defendant is suggesting that this court should find that there was a duty on BDC to either provide her withindependent legal advice or counsel her to seek independent legal advice to avoid her claim of undue influence.

In reviewing the caselaw presented by plaintiff's counsel, it appears to be settled law that barring a special relationship or exceptional circumstances, therelationship between the bank and its customer is that of debtor and creditor and that there is no fiduciary relationship established whenthe bank enters into a guarantee with a guarantor. In Bank of Montreal v. 1480863 Ontario Inc. (2007), 156 A.W.C.S. (3d) 1140 (Ont.Sup. Ct.) at paragraphs 37-38 Ross, J. reviewed the law as he dealt with an application for

summary judgment by the Bank on a claim forguarantee signed by the respondent and stated: It is well established that absent special circumstances the relationship between a bank and its customer is that of debtor and creditor.The Court of Appeal in Toronto Dominion Bank v. Forsythe, (ON CA), 47 O.R. (3d) 321, [2000] O.J. No. 686 (Ont.C.A.), states at para. 14 There is ample authority for the proposition that the relationship that exists between a bank and its customer is that of debtor andcreditor: see Foley v. Hill (1848), 2 H.L.C. 28, 9 E.R. 1002; Bertolo v.

Bank of Montreal (1986), (ON CA), 57 O.R.(2d) 577 (C.A.). Special facts would have to be pleaded before that relationship could be transformed into a fiduciary one as in Lloyd'sBank Ltd. v. Bundy [1975] 1 Q.B. 326 (C.A.). The relationship between a bank and the guarantor of its customer's loan is determined bythe terms of the guarantee. The conditions under which the guarantor can be excused has most recently been discussed by the SupremeCourt of Canada in Manulife Bank of Canada v. Conlin (SCC), [1996] 3 S.C.R. 415. 38.

More recently in September 2006, the Court of Appeal reaffirmed the above principle in Baldwin v. Daubney, (ON CA), 83 O.R. (3d) 308, [2006] O.J. No. 3824 (Ont. C.A.). At para. 12 the Court states, It is settled law also that, barring a special relationship or exceptional circumstances, the relationship between a bank and its customer isthat of debtor and creditor. The motion judge set out the applicable law at para. 78 of the reasons, as recently summarized by this court inPierce v.

Canada Trustco Mortgage Co. (2005), (ON CA), 254 D.L.R. (4th) 79 at para. 27: Generally speaking, the relationship between a financial institution lender and its customer borrower is a purely commercial relationshipof creditor and debtor. Absent any special relationship or exceptional circumstances such as would give rise to a fiduciary duty (which isnot pleaded by Mrs. Pierce), the courts have consistently held that the lender owes no duty to the borrower in connection with the makingof the loan. In particular, the bank owes no duty to its customer to advise the customer not to undertake the loan: see Bertolo v.

Bank ofMontreal, (1986), (ON CA), 57 O.R. (2d) 577, 33 D.L.R. (4th) 610 (C.A.), and Bank of Montreal v. Duguid (2000), (ON CA), 47 O.R. (3d) 737, 185 D.L.R. (4th) 458 (C.A.). [35] In Bank of Montreal the court concluded on the question of independent legal advice that “The above authorities inform thatthe lack of independent legal advice will not, of itself relieve the respondent of her contractual obligations under the August guarantee.

The lack of independent legal advice must be coupled with other evidence, such as evidence of non est factum, undue influence,misrepresentation or fraud.” [36] The evidence before the court contained in the affidavit of Mike Ball and Dale Rideout do not support that there was anyelement of oppression, coercion compulsion or abuse of authority applied to have Ms. Rideout sign the loan guarantee nor does heraffidavit raise any issues of that kind. Rather, she seems to say that she did not know that she was signing a personal guarantee.

Thisstatement seems to me to fall into the realm of non est factum although the third defendant did not specifically plead that defence. [37] The third defendant, Ms. Rideout has not satisfied me that there were any actions by BDC officials that could support a findingof undue influence. There is no allegation or evidence of misrepresentation or fraud. At best, the evidence of Ms. Rideout could showthat she did not understand that she was signing a personal guarantee.

In the absence of any other circumstances or evidence, I cannotconclude that BDC was required to either provide her with independent legal advice or was required to inform her that she should seekindependent legal advice. Certainly, Ms. Rideout could have sought out either legal or accounting advice and given that the Letter ofOffer of Loan had been couriered to her on July 13, 2007 and was not signed until July 18, 2007, she had the opportunity to do so.

Sheadvised the court that she had engaged legal counsel previously and had the benefit of legal advice until the costs associated with thatservice became too high. Non est Factum [38] Hoegg, J. addressed the test for the defence of non est factum at paragraph 14 of the Royal Bank case: 14 The non est factum defence has been addressed by Newfoundland and Labrador courts in recent years. In White v. True NorthSprings Ltd., [2001] N.J. No. 266 (Nfld. T.D.) Hall, J. relied on the test to be met to establish non est factum as articulated by Cameron,J. (as she then was) in Gorman v.

Gorman (1991), (NL SC), 90 Nfld. & P.E.I.R. 263 (Nfld. T.D.). Gorman followedthe oft-quoted English decision Gallie v. Lee, [1970] 3 All E.R. 961 (U.K. H.L.) [hereinafter Saunders]. The principles adopted by bothHall, J. and Cameron, J. from the Saunders case were stated by Cameron, J. at para. 52 of Gorman:

There is a heavy burden of proof on the person pleading non est factum: 1. There must be no carelessness on the part of the person pleading non est factum; 2. Between the document and what it was believed to be there must be a fundamental or radical or essential or very substantial difference; 3.

The plea is not available to a person whose mistake was a mistake as to the legal fact of the document whether his own mistake or thatof the legal adviser. [39] Ross, J. commented on the circumstances and responsibilities of a guarantor in signing a guarantee in Bank of Montreal asfollows at paragraph 18: From the foregoing evidence of the respondent, she says she would not have signed the guarantee if she had known that it was aguarantee for the company's indebtedness to the bank. Obviously the respondent had the guarantee document before her when she signedit. She agrees that it appeared to be a legal document.

She signed it of her own free will; the document was not obscured in any way; shecould have read it if she had chosen to do so and she was not pressured threatened or intimidated into signing it. Placing the respondent'sevidence at its highest, she executed the August guarantee without ascertaining the nature of the document she was signing. Signing anagreement without having read it does not in the absence of fraud or misrepresentation absolve a person from being bound by theagreement. In Fraser Jewellers

(1982) Ltd. v. Dominion Electric Protection Co. (1997), (ON CA), 148 D.L.R. (4th)496 (Ont. C.A.), the Court of Appeal states at p. 504, para. 30. As a general proposition, in the absence of fraud or misrepresentation, a person is bound by an agreement to which he has put hissignature whether he has read its contents or has chosen to leave them unread. Cheshire, Fifoot & Furmston's Law of Contract, 13th ed.(Toronto: Butterworths, 1996) at p. 168. Failure to read a contract before signing it is not a legally acceptable basis for refusing to abideby it.

A businessman executing an agreement on behalf of a company must be presumed to be aware of its terms and to have intendedthat the company would be bound by them. The fact that Mr. Gordon chose not to read the contract can place him in no better positionthan a person who has. [40] Ms. Rideout is an educated woman, engaged in a business enterprise and as well teaches in a post secondary institution. She isbusy in her professional life and has sought postponements from the court on several occasions as she was unable to participate becauseof her teaching obligations.

She has also spent considerable time and effort with respect to the business enterprise, TimberStone DesignGroup Inc. She is a director of TimberStone which was engaged in starting a food service and accommodations operation and anengineered structural building specialist using timber frame and stone structures. [41] Ms. Rideout described in her affidavit, the various financial difficulties involved with the business startup of TimberStone andthe tremendous pressure that she felt with respect to arranging the necessary financing to complete the business plan.

The loan andguarantee from BDC occurred near the end of the negotiations for financing and was described as “a solution he could offer to a lendingsnag that positioned TimberStone with a shortfall of approximately $80,000.” In the affidavit, Ms.

Rideout states that “Mike Ball, ofBDC, assured me that his organization could lend $50,000 for working capital without any hitch, and that the process could becompleted quickly so that startup could proceed with a much smaller shortfall of approximately $30,000.” [42] The Letter of Offer (Loan) dated July 13, 2007 was couriered to the third defendant and contained the joint and severalguarantee provision of the three named defendants reproduced in paragraph 19. The document was short and there was ample time toread the document and seek any advice that may have been required.

The Letter of Offer (Loan) document was signed along with theGuarantee on July 18, 2007 in the office of Mr. Ball at BDC. I have described the Guarantee document in paragraph 20 and it would bedifficult to imagine that Ms. Rideout would not have known that she was signing a Guarantee. If, as she claims, she did not, it could onlyhave been because she did not read either of the documents. Neither was lengthy nor overly complicated. [43] In Bank of Montreal Ross, J., following his findings with respect to undue influence, also went on to deal with a non estfactum defence although it had not been pleaded.

He noted that the respondent’s position was that she would not have signed theguarantee if she had known she was guaranteeing the activities of her husband’s company. Ross, J. commented at paragraph 28: …In respect the defence of non est factum the Supreme Court of Canada in Marvco Color Research Ltd. v. Harris (1982), (SCC), 141 D.L.R. (3d) 577 (S.C.C.) at p. 580 referred to the dissenting judgment of Cartwright J in Prudential Trust Co. v. Cugnet, (SCC), [1956] S.C.R. 914 (S.C.C.), wherein Cartwright J said, ...

Generally speaking, a person who executes a document without taking the trouble to read it is liable on it and cannot plead that hemistook its contents, at all events, as against a person who acting in good faith in the ordinary course of business has changed hisposition in reliance on such document 29 The Court in Marvco, referring the reasons of Carwright J. in Prudential said at p. 581,

He concluded, therefore, that any person who fails to exercise reasonable care in signing a document is precluded from relying on theplea of non est factum as against a person who relies upon by a document in good faith and for value. 30 The Court in Marvco at p. 585 stated, In my view, with all due respect to those who have expressed views to the contrary, the dissenting view of Cartwright J. (as he then was)in Prudential, supra, correctly enunciated the principles of law of non est factum. [44] There is a heavy burden on a person who signs a document to establish that it is not his or her document.

The burden ofproving non est factum in this case is on the third defendant and in discharging that burden she must establish proof that she tookreasonable care. [45] Estey, J. in Marvco Color Research Ltd. v. Harris, (SCC), [1982] 2 S.C.R. 774 explains that carelessnesswhatever the reason cannot be a factor in supporting a defence of non est factum.

He states and paragraph 25: …“The defendants inexecuting the security without the simple precaution of ascertaining its nature in fact and in law, has [sic] nonetheless taken an intendedand deliberate step in signing the document, and have caused it to be legally binding upon themselves.” He also points out at paragraph26, “The principle of law is based not only upon the principle of placing the loss on the person guilty of carelessness but also upon therecognition of the need for certainty and security in commerce.” [46] It is my finding that Ms.

Rideout did not exercise reasonable care in signing the Loan document or the Guarantee. She mayhave been under pressure to conclude the financing for the company so that the business plan could proceed. She may have been carelessin her execution of the documents provided to her by BDC. If she executed the documents provided to her by BDC without readingthem, she cannot now claim that she misunderstood the contents against a person who acted in good faith in the ordinary course ofbusiness.

COSTS [47] The Guarantee states in paragraph 2 that “the Guarantor also promises to pay to the Bank all legal fees and disbursements, on asolicitor and client basis, incurred by the Bank in reference to any suit upon this guarantee.” The plaintiff seeks their costs on thisbasis and I have no reasons to depart from what the parties have agreed to in the signed Guarantee.

DISPOSITION [48] In conclusion, I find that neither the defence of undue influence nor non est factum enable the third defendant, Joan Rideout toavoid liability on her personal guarantee. [49] The plaintiff is entitled to judgment as against the third defendant as follows: 1. The sum of $50,727.38 as of December 14, 2011. 2. Interest from December 15, 2011 until February 29, 2012 calculated at the contractual rate set out in the Loan and Guarantee. 3. Interest thereafter pursuant to the Judgment Interest Act, R.S.N.L. 1990, c. J-2. 4.

Solicitor and client costs for the plaintiff’s disbursements and legal fees. _______________________________ Deborah E. Fry Justice