CANADIAN MORTGAGE SERVICING CORPORATION Plaintiff - v. -, 2023 SKKB 27

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 27 Date: 2023 02 06 Docket: QBG-SA-00602-2021 Judicial Centre: Saskatoon ___________________________________________________________________________ BETWEEN: CANADIAN MORTGAGE SERVICING CORPORATION Plaintiff - and - KORDEL KORF Defendant Counsel: Jeffrey M. Lee, K.C., and K. James Rose for the plaintiff Daniel K. Jukes for the defendant ___________________________________________________________________________ JUDGMENT GERECKE J. February 6, 2023 ___________________________________________________________________________ A. INTRODUCTION [ 1 ] The plaintiff applies for

summary judgment. It claims pursuant to a guarantee granted by the defendant. The defendant agrees that this is an appropriate case for

summary judgment but asks the Court to dismiss the claim on the basis that the statutory limitation period expired. The plaintiff argues that it commenced this action in time. [ 2 ] Whether the limitation period expired is the only one issue to be determined, though there are many arguments to sift through to decide that question. [ 3 ] For the reasons that follow, I find that this is an appropriate case for

summary judgment. The limitation period concerning Mr. Korf’s obligations under the guarantee expired prior to commencement of this action, and the plaintiff’s action must be dismissed. B. BACKGROUND [ 4 ] The plaintiff, Canadian Mortgage Servicing Corporation [CMSC], claims against the defendant, Kordel Korf, for $20,124,441.43 as of May 26, 2021, plus interest from that date to date of judgment. CMSC’s claim [Claim] is brought pursuant to a guarantee granted by Mr. Korf dated December 1, 2014 [Guarantee]. [ 5 ] By the Guarantee, Mr.

Korf guaranteed to Atrium Mortgage Investment Corporation [Lender], of which CMSC became the successor in 2020, all obligations of 101118672 Saskatchewan Ltd., formerly known as Korf Properties Ltd. [Borrower] or [KPL]. [ 6 ] Pursuant to a commitment letter dated October 29, 2014 [Commitment], in December 2014 the Lender advanced financing to the Borrower in the principal amount of $18,500,000 [Loan]. To secure repayment of the Loan, the Borrower granted various security to the Lender as provided for in the Commitment. Among the requirements of the Commitment was the granting of the Guarantee by Mr.

Korf. [ 7 ] It is uncontroverted that Mr. Korf granted the Guarantee in support of the Loan pursuant to the Commitment. [ 8 ] Mr. Korf was at all times the sole shareholder, director and officer of the Borrower. It was, as CMSC argues, a “one man corporation”, with Mr. Korf as its controlling mind. In all, he signed many documents on behalf of the Borrower in respect of the Commitment and the Loan. [ 9 ] The Loan was scheduled to mature on December 1, 2016. By a letter agreement [Extension Agreement] dated February 23, 2017 (the date of acceptance by the Borrower), the Lender, the Borrower and Mr.

Korf agreed in writing to extend the maturity date to January 15, 2018. The Extension Agreement provided that all terms and conditions of the Commitment and all security

“executed by the borrowers and guarantors of the Loan” would remain in full force and effect. Mr. Korf signed the Extension Agreement in two places and in two capacities – on behalf of the Borrower in his capacity as a corporate officer or director (which was not specified), and in his personal capacity as guarantor. [ 10 ] On October 26, 2017, the Borrower wrote to the Lender to provide updates on the status of the Loan. The letter advised that the Borrower would be unable to repay the Loan in full by the extended maturity date of January 15, 2018, and requested a further extension to January 15, 2019.

That request was not accepted by the Lender, who demanded repayment of the Loan on December 1, 2017. The Lender made demand on both the Borrower and Mr. Korf [2017 Demand], requiring repayment in full by January 2, 2018. [ 11 ] Through counsel, the Borrower and Mr. Korf put forward a request for a forbearance agreement on December 30, 2017. The terms of that proposal were rejected by the Lender on January 9, 2018. [ 12 ] The parties evidently continued negotiating, and the Borrower and Lender entered into a forbearance agreement dated April 18, 2018 [Forbearance Agreement].

Under the Forbearance Agreement, the Lender agreed that the indebtedness under the Commitment would not become due and payable until August 31, 2018 [First Forbearance Period]. Such indebtedness was stated to be comprised of the outstanding principal, interest and costs [Indebtedness] (as it may have varied from time to time). The Lender agreed not to demand repayment of the Indebtedness until expiry of the First Forbearance Period. [ 13 ] Mr. Korf signed the Forbearance Agreement for the Borrower, without his corporate capacity being identified.

Nothing on the face of the document indicates that he was in any way signing the Forbearance Agreement in his personal capacity or as guarantor. [ 14 ] There were two amendments to the Forbearance Agreement, dated September 1, 2018, and April 1, 2019, respectively. Again, the only borrower or obligor party was the Borrower itself, and the signature lines were the same as for the Forbearance Agreement.

By the amendments, the First Forbearance Period was extended twice, the last time to December 31, 2019 [Final Forbearance Period]. [ 15 ] After the Final Forbearance Period expired without the Indebtedness being repaid, the Lender again demanded payment from the Borrower and Mr. Korf (pursuant to his Guarantee). By March 2020, CMSC had succeeded the Lender. On March 17, 2020, CMSC obtained an order of this Court appointing a receiver in respect of the Borrower’s property ( Canadian Mortgage Servicing Corporation v 101118672 Saskatchewan Ltd. (17 March 2020) Saskatoon, QBG-SA-00399-2020 (Sask QB)).

Following conclusion of the receivership, the outstanding Indebtedness was $19,285,294.73, which the Borrower had no remaining assets to satisfy. [ 16 ] CMSC commenced this action against Mr. Korf on June 2, 2021. [ 17 ] The foregoing is all uncontroverted, and I find it as fact. C. ISSUES [ 18 ] The issues to be determined are as follows: 1. Is this a matter in which

summary judgment should be granted? 2. Did CMSC commence this action prior to expiry of the statutory limitation period? Should

summary judgment be granted in favour of the plaintiff or the defendant? Arguments raised by the parties will be dealt with as subsets of the second issue. D. ANALYSIS 1. Is this a matter in which

summary judgment should be granted? [ 19 ]

Part 7 of The Queen’s Bench Rules governs

summary judgment applications. Rule 7-5(1)(

a) authorizes the Court to grant

summary judgment if satisfied that there is no genuine issue requiring trial. [ 20 ] As Popescul C.J. observed in Pervez v Caskey , 2013 SKQB 377 at paras 31-33 , [2013] 12 WWR 794 , the

summary judgment procedure is intended to eliminate unnecessary trials. Though I will not quote them here, I have considered the guidance in Hryniuk v Mauldin , 2014 SCC 7 , [2014] 1 SCR 87; Viczko v Choquette , 2016 SKCA 52 , 396 DLR (4th) 449 , and Tchozewski v Lamontagne , 2014 SKQB 71 , [2014] 7 WWR 397 . [ 21 ] Mr. Korf raises only one defence before the Court – that the relevant limitation period under The Limitations Act , SS 2004, c L-16.1 [ Act ], expired before CMSC commenced this action, and thus it is statute-barred.

He does not dispute the quantum of CMSC’s claim, the assignment to it of the Loan, the security and the Guarantee, its realization on its security (including through a court-appointed receiver), or any other aspect of the Claim. He did not file his own affidavit, content to rely on those filed by CMSC (in this file and the receivership court file of QBG-SA-00399-2020), along with an Agreed Book of Evidence filed jointly by the parties. [ 22 ] Though a trial might add some colour to the narrative, the reality is that all the evidence necessary to determine this matter is already before the Court.

None of the facts are controverted. Though the limitation period defence and CMSC’s arguments on it contain complexities, that is the only remaining issue. To send the parties to trial would result in unnecessary expense and time. This is easily an appropriate case for

summary judgment. 2. Did CMSC commence this action prior to expiry of the statutory limitation period? (

a) Legislation

[ 23 ] The relevant provisions of the Act are as follows: 5 Unless otherwise provided in this Act , no proceedings shall be commenced with respect to a claim after two years from the day on which the claim is discovered. Discovery of claim 6

(1) Unless otherwise provided in this Act and subject to subsection (2), a claim is discovered on the day on which the claimant first knew or in the circumstances ought to have known: (

a) that the injury, loss or damage had occurred; (

b) that the injury, loss or damage appeared to have been caused by or contributed to by

an act or omission that is the subject of the claim; (

c) that the act or omission that is the subject of the claim appeared to be that of the person against whom the claim is made; and (

d) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

(2) A claimant is presumed to have known of the matters mentioned in clauses (1)(

a) to (

d) on the day on which the act or omission on which the claim is based took place, unless the contrary is proved. … Demand obligations 10 Unless otherwise provided in this Act , in the case of a default in performing a demand obligation, the day on which

an act or omission on which a claim is based takes place is the day on which the default occurs. Acknowledgments and part payments 11

(1) If a person acknowledges the existence of a claim for payment of a debt, for the recovery of property, for the enforcement of a charge on property or for relief from enforcement of a charge on property, the act or omission on which the claim is based is deemed to have taken place on the day on which the acknowledgment was made.

(2) For the purposes of subsection (1), an acknowledgment: (

a) subject to subsections (3), (7) and (8), must be in writing and must be signed by the person making it or the person’s agent; and (

b) must be made, before the expiry of the limitation period applicable to the claim, to the claimant, the claimant’s agent, a receiver, a receiver-manager or an official receiver or trustee acting pursuant to the Bankruptcy and Insolvency Act (Canada) .

(3) In the case of a claim for payment of a debt, part payment of the debt by the person against whom the claim is made or by the person’s agent is deemed for the purposes of subsection (1) to be an acknowledgment. (4) Subsection (1) applies to an acknowledgment of the existence of a claim for payment of a debt even though the person making the acknowledgment refuses or does not promise to pay the debt or the balance of the debt still owing. … Agreement 21

(1) Subject to subsection (2), if an agreement expressly provides for the extension of a limitation period, the limitation period is altered in accordance with the agreement.

(2) Nothing in subsection (1) authorizes an agreement to extend the limitation period established by

section 7.1 or the ultimate limitation period established by

section 7. (

b) Formation of contracts [ 24 ] Several of CMSC’s arguments advance the concept that Mr. Korf in some manner entered into or is bound by the Forbearance Agreement. In the recent decision of AlumaSafway Inc. v The International Association of Heat & Frost Insulators and Asbestos Workers, Local 119 , 2022 SKCA 99 [ AlumaSafway ], the Court of Appeal discussed the formation of contracts, setting out a useful

summary of the law at paragraphs 48 to 54. The following principles relevant to the present case may be derived from AlumaSafway : a. A contract is formed where one party makes an offer that is accepted by the other, both parties intend to create a legal relationship, and consideration is exchanged. b. Determination of whether a legally binding agreement has been made turns on whether the parties have indicated to the world their intent to contract and the terms.

The question is not their subjective intentions or beliefs, but “whether their conduct was such that a reasonable person would conclude that they intended to be bound to certain terms”: AlumaSafway , para 49 . c. Not all communications are offers or acceptances. Again, the determinations are to be made by reference to what an objective reasonable observer would conclude.

d. Acceptance must be “clear, unambiguous, and absolute” (AlumaSafway, para 52) but need not be in express terms; it may befound in the language or conduct of the offeree if sufficiently clear, unambiguous and absolute (AlumaSafway, para 53). Conduct that isunequivocally tied to the performance of a contract on terms proposed by the offeror may be treated as acceptance. [25] Below I discuss provisions of the Act, including s. 21, which requires that an agreement to suspend a limitationperiod must be express.

That could potentially create a more stringent standard than discussed in AlumaSafway, though if I find anacceptance by Mr. Korf that is “clear, unambiguous, and absolute” that would seem to be extremely close to express. (

c) Interpretation of contracts [26] At its core, this application is focused on contractual

interpretation. The governing authority on the modernapproach to contractual

interpretation is Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53, [2014] 2 SCR 633 [Sattva]. Theprinciples set out in Sattva may be distilled to the following: a. The goal is to determine the objective intent of the parties.

Interpretation must be grounded in the text, in light of the entirecontract. b. A decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistentwith the surrounding circumstances known to the parties at the time of formation of the contract. c. Surrounding circumstances may be relied on for

interpretation of provisions, but not to deviate from the text so as to create a newagreement. Consideration of surrounding circumstances must never be allowed to overwhelm the words of the agreement. d. Evidence of surrounding circumstances should consist only of objective evidence of the background facts at the time that wouldhave been within the knowledge of both parties. [27] Historically, guarantees were often strictly construed against the lender. Guarantees were treated as a special sortof contract. That has changed, such that guarantees are now largely interpreted in the manner of other contracts.

In QK Investments Inc. vCrocus Investment Fund, 2008 MBCA 21, 290 DLR (4th) 84, the Manitoba Court of Appeal discussed guarantees and their

interpretationas follows: The Characteristics of a Guarantee [37] A guarantee has been defined by the Supreme Court of Canada in Communities Economic Development Fund v. CanadianPickles Corp., (SCC), [1991] 3 S.C.R. 388, as (at p. 413): … generally a contract between a guarantor and a lender. The subject of the guarantee is a debt owed to the lender by a debtor. In thecontract of guarantee, the guarantor agrees to repay the lender if the debtor defaults.

The exact nature of the obligation owed by theguarantor to the lender depends on the construction of the contract of guarantee, but the liability of the guarantor is usually madecoterminous with that of the principal debtor. … [38] As noted in Professors Jacob S. Ziegel, Ronald C. C. Cuming & Anthony J.

Duggan, Secured Transactions in Personal Propertyand Suretyships, 4th ed. (Toronto: Emond Montgomery Publications Limited, 2003) (at p. 586): … A distinguishing feature of a guarantee contract is that the guarantor’s liability arises only when the principal fails to perform theobligations; the guarantor’s liability is always ancillary, or secondary, to that of the principal, who remains primarily liable. … [39] All parties agree that ordinary contractual

interpretation principles apply to contracts of guarantee. See Eli Lilly & Co. v.Novopharm Ltd., (SCC), [1998] 2 S.C.R. 129. But at the same time it is essential to appreciate that guarantees are aspecial type of contract which may well necessitate a modification of the normal rules of

interpretation in suretyship cases. [40] The leading case on this point is Manulife Bank of Canada v. Conlin, (SCC), [1996] 3 S.C.R. 415. Cory J., forthe majority, commenced his analysis of the position of a guarantor with the following observation (at para. 4): Generally, it is open to parties to make their own arrangements.

It follows that a surety can contract out of the protection provided to aguarantor by the common law or equity. … [41] He then went on to state (at paras. 15-16): … if there is a doubt or ambiguity as to the construction or meaning of the clauses binding the guarantor in this case, they must be strictlyinterpreted and resolved in favour of the guarantor. Further, as a result of the favoured position of guarantors, the clauses binding themmust be strictly construed. Finally, when the guarantee clause is interpreted, it must be considered in the context of the entire transaction.

This flows logically fromthe bank’s position that the renewal agreement was an integral part of the original contract of guarantee. This position I believe iscorrect. It follows that fairness demands that the entire transaction be considered and this must include the terms and arrangements forthe renewal agreement. [42] In Geoff R. Hall, Canadian Contractual

Interpretation Law (Markham: LexisNexis Canada Inc., 2007), the author summarizesthe decision as follows (at para. 7.6.1): Although the

interpretation of a guarantee is for the most part an application of the normal rules of contractual

interpretation, themajority decision in Manulife Bank of Canada v. Conlin, the leading Canadian case on the

interpretation of guarantees, reveals four waysin which the

interpretation of a guarantee differs from the

interpretation of some other type of contract. First, the contra proferentem ruleis more apt to apply. Second,

interpretation of a guarantee takes into account the fact that guarantors have a favoured position in the

eyes of the law. As a result of each of these two factors, provisions binding a guarantor are strictly interpreted, with any doubt orambiguity resolved in the guarantor’s favour. Third, while parties to a guarantee may contract out of the protections which are affordedto a guarantor at common law or in equity, such contracting out can only be accomplished by clear language.

Fourth, a guarantee mustbe interpreted in the context of the entire transaction, including the circumstances of the underlying obligation and any dealings withrespect to it. ….. [43] The fourth difference – that a guarantee should be interpreted “in the context of the entire transaction” – actually is of courseentirely consistent with the modern “golden rule” of statutory

interpretation. See Campeau v. Imperial Life Assurance Co. of Canada,2005 MBCA 148, 201 Man.R. (2d) 119, and Moore (Geoffrey L.) Realty Inc. v. Manitoba Motor League, 2003 MBCA 71, 173 Man.R.(2d) 300 at paras. 13-18. [Emphasis added] [28] Thus,

interpretation of guarantee agreements does not differ much from

interpretation of other agreements inmost respects. As with all agreements, surrounding context is relevant and important, and consideration of such circumstances does notoffend the parol evidence rule. (

d) Effect of forbearance agreements [29] In Hamilton (City) v Metcalfe & Mansfield Capital Corporation, 2012 ONCA 156, 347 DLR (4th) 657[Metcalfe], the Ontario Court of Appeal addressed the effect of a forbearance agreement in the context of limitation periods and Ontario’scounterpart legislation to the Act: [73] At common law, a creditor and debtor can agree to forbear enforcement of a debt, and such an agreement would suspend thelimitation period for the period of forbearance.

In order to achieve this result, the creditor must promise not to enforce the debt, and thedebtor must provide some consideration in exchange for this promise. In other words, a creditor’s promise to forbear will not suspend thelimitation period unless the debtor provides consideration for that promise: Shook v. Munro et al, (SCC), [1948] S.C.R.539. [74] Each of the cases the City relies on dealt with a debtor-creditor scenario in which the creditor promised not to sue on the debtand the court had to determine whether the creditor provided consideration in return for that promise.

In cases where there was nocorresponding promise, the limitation period for the action to enforce the debt was not suspended: see Shook Estate; Arrow-KempHeating and Air Conditioning Ltd. v. Oddi, (ON SC). In a case where the creditor did provide a correspondingpromise, the limitation period for the action to enforce the debt did not commence until after the period of forbearance: see MortgageInsurance Co. of Canada v.

Grant, 2009 ONCA 655, 99 O.R. (3d) 535, at para. 30. [75] The cases relied on provide a means by which parties can agree to suspend the limitation period for an action to enforce paymenton the debt. This makes sense because, if a creditor and debtor agree to change the repayment terms of the debt obligation, they haveessentially renegotiated their debt agreement.

So the limitation period for the creditor’s action to collect on the debt would not runbecause – due to the agreement to change the repayment terms – the debtor is not effectively in default. … [78] Both the City and the Devonshire defendants agree that the relevant agreement is the standstill provision of the NoteholderAcknowledgement that the City signed on August 23, 2007, in which the City “commit[ted] to continuing to roll its ABCP during the60-day Standstill Period described in the Press Release [which was extended until January 10, 2008] and to refrain from taking anyaction that would precipitate a default by the Issuers.” The parties disagree on whether this standstill provision can be read as anagreement to suspend the limitation period for the City’s tort and equity claims. [79] The City interprets the standstill provision as a forbearance agreement tolling the limitation period under which, among otherthings, it could not commence any action in respect of the Devonshire notes.

There are several reasons why I disagree with the City’sinterpretation. [80] First, s. 22(1) requires a bilateral agreement between the parties to toll a limitation period. There is no evidence that there wasany agreement for such purpose. Second, a mere promise to forbear does not suspend a limitation period unless the promise is given inexchange for some consideration from the debtor. The authorities that the City relies on for this submission are all in a debtor creditorcontext.

They do not assist the City to establish an agreement to toll the limitation period on a tort or equity claim. [Emphasis added] [30] Metcalfe was discussed in Markplan Inc. v Osman, 2019 ONSC 3209 [Markplan], where the court was asked togrant

summary judgment in respect of a wrongful dismissal claim and counterclaim arising from the sale of a business. The defendants tothe counterclaim argued that the relevant limitation period had expired before the counterclaim was brought. [31] The following discussion from Markplan relates to the counterclaim. The parties arguing for tolling were thedefendants (plaintiffs by counterclaim). Reference in the passage to the plaintiffs is to the defendants by counterclaim. [10] It is asserted that there was a tolling agreement between the parties.

Between December 2014 and February 2015, there werecommunications between counsel arising from the motion to dismiss the Alberta action. This included a forbearance by the plaintiffs [thedefendants to the counterclaim] in requiring a defence to this action, and an agreement “freezing any further steps” in all the actions “tofacilitate discussions regarding potential for resolution.” Those discussions foundered not long after, in early 2015. There was nodiscussion of tolling of limitation periods, or of forbearance respecting any counterclaim.

Indeed, to the extent that limitation periodswere addressed at all in the correspondence, it was by the defendants, whose counsel noted that if the Alberta action was dismissed thenan action would be commenced in Texas where “the relevant limitation period…is four years.” [11] The law is clear that an enforceable tolling agreement under s. 22 of the Limitations Act must be “an express and bilateral

agreement between the parties that contains a clear and unambiguous request by one party to toll a limitation period and an equally clear and unambiguous affirmative response by the other” : see PQ Licensing S.A. v. LPQ Central Canada Inc., 2018 ONCA 331 at para. 40 . The Court of Appeal has also held that “a mere promise to forbear does not suspend a limitation period”: Hamilton (City) v. Metcalfe & Mansfield Capital Corp. , 2012 ONCA 156 at para. 80 . [Emphasis added] [ 32 ]

Section 21 of the Act is not identical to s. 22 of the Ontario legislation ( Limitations Act, 2002 , SO 2002, c 24, Sch

B) referred to in Metcalfe and Markplan . The Ontario provision’s requirements appear more easily met, as s. 22 provides simply that a limitation period “may be varied or excluded by an agreement”. However, Ontario jurisprudence requires an express agreement as discussed in Markplan . [ 33 ]

Section 21 of the Act , which applies here, provides that a limitation period will be altered where an agreement “expressly” provides for extension of the limitation period. A review of limitations legislation in other Canadian provinces discloses that only Saskatchewan and Alberta have limitations statutes that contains the “express” requirement.

That requirement for Alberta is found in s. 7(1) of the Limitations Act , RSA 2000, c L-12 [ Alberta Act ]. [ 34 ] In Sucker Creek First Nation v Canada (Attorney General) , 2013 ABQB 199 [ Sucker Creek ], Clackson J. analysed the “agreement expressly provides” requirement found in the Alberta Act .

After reviewing a number of prior Alberta court decisions, including Bugg v Beau Canada Exploration Ltd. , 2006 ABCA 201 , 391 AR 208, Clackson J. stated: [32] It is plain that the discussions in Bugg , between the parties, initially, did not have the kind of detail or certainty that would allow the Court to conclude that there was an agreement. Equally plainly, Beau had not acted in the second time period because Bugg had undertaken to defend and the litigation stood still while he got around to doing so.

They were agreed and because they had agreed, their agreement precluded one party doing anything until the agreement had been fulfilled by Bugg filing a defence or either party gave the other party reasonable notice that the agreement was to end. Of note however, is the fact that not a single word was written by the parties about the impact of their agreement on the five year delay period.

It is in that context that Fruman J.A. offered the opinions at para. 18 of the decision: 18 It follows that a standstill agreement can be written, oral, or partly written and partly oral, as long as it is express and not based on intent or inference. This

interpretation is consistent with Webber [2005 ABQB 718] and 525812 Alberta Ltd. [2004 ABQB 938]. Because it will be more difficult to prove an oral agreement, the best course of action is to reduce the agreement to writing and specifically set out its terms. This Court has said: “when a standstill agreement is entered into, it would be preferable to describe it as such, and to state precisely what steps in the litigation process are waived or suspended pending the exploration of settlement”: Wasyleshko v.

Chamakese (1999), 228 A.R. 384 , 1999 ABCA 47 . [33] From that opinion we learn that an express agreement does not have to be completely or even partly written so long as it is express and not based on intent or inference. However, when determining whether the agreement tacks time on to the five year period or stops the five year clock from running, we are told “not all agreements that remove the need to take an immediate step automatically add time to the end of the period. The

interpretation must arise from the words used, or must be a reasonable implication or inference from them”. [34] As a result of this synopsis it is plain that an express agreement is an agreement which is plainly demonstrated on the evidence provided. One does not have to imply its existence or essential features. However, the impact of the agreement on the five year limitation period depends upon a reasonable

interpretation of the words written or spoken which constitute the agreement and the circumstances in which they were written and spoken. The agreement need not say anything at all about the five year limitation rule or whether the time extended should be added to the five year period or whether the five year period is simply suspended while the agreement governs relations between the parties. [35] In short, the conclusion as to the impact of the agreement on the five year limitation is a matter which may be decided by inference.

It is not necessary that the “express agreement” expressly state anything about its impact on the five year limitation. [ 35 ] Thus, the law in Alberta, the only other Canadian province to include an express agreement requirement in its statute to suspend the running of a limitation period, is that to establish the existence of an agreement, it must have been made expressly. Such existence cannot be established by inference or implication. Once the agreement’s existence is established expressly, however, its terms may be established by inference. (

e) Summary of Mr. Korf’s position [ 36 ] The Loan matured on January 15, 2018 (as extended by the Extension Agreement). Briefly, Mr. Korf argues that the limitation period against him began to run on January 2, 2018, the date of repayment stipulated by the 2017 Demands. He says that no intervening events caused that limitations clock to stop running. (

f) Summary of CMSC positions [ 37 ] I will again be brief here, as below I will discuss the arguments of CMSC in considerably greater detail. [ 38 ] CMSC advanced four main arguments in oral submissions: 1. The Guarantee was a continuing guarantee. Mr. Korf guaranteed obligations of the Borrower under agreements collateral to the Commitment. CMSC says the Forbearance Agreement was collateral to the Commitment. It says that the Forbearance Agreement had the effect of re-setting the time for payment of the Indebtedness, and temporarily suspended the obligation to pay it.

The requirement to pay then resumed at the end of the forbearance period. That suspended the limitation period as it pertained to the Borrower. That effectively suspended the limitation period against Mr. Korf because the Borrower’s contractual obligation to pay had been suspended. Upon expiry of the forbearance period, as extended, the Borrower defaulted, and a new cause of action arose.

Under this argument, the main question to be answered is: Did the Forbearance Agreement have the effect of suspending thelimitation period against Mr. Korf? 2. The Forbearance Agreement (and the extensions) was consented to by Mr. Korf and is therefore binding on him. 3. In s. 6(1) of the Act, there are four conditions governing the start of a limitation period, all of which must exist before a limitationperiod starts to run. The last is that in s. 6(1)(d), being the time when a claimant knows or ought to know that a proceeding would be anappropriate means to seek a remedy (i.e., a legally appropriate means).

CMSC says that because it was forbearing enforcement againstthe Borrower during the Forbearance Period, it would not have been legally appropriate for it to sue Mr. Korf as that would havebreached the Forbearance Agreement by triggering a right of subrogation by Mr. Korf against the Borrower. Under this argument, the main question to be answered is: When the Forbearance Agreement was made, did that trigger s. 6(1)(

d) ofthe Act, on the basis that it was not legally appropriate for CMSC to sue Mr. Korf? 4. KPL signed the Forbearance Agreement as Mr. Korf’s agent, thereby binding him to its terms. [39] In its Brief, CMSC treated the foregoing as three arguments, with the first two covered together. In my view, itis also appropriate to include the agency argument with those first two, so I will pose two questions and include CMSC’s first, secondand fourth arguments under the same broad heading. (

g) The central questions [40] The two key questions to be answered are as follows: (

i) Did the Forbearance Agreement have the effect of suspending the limitation period against Mr. Korf? (ii) When the Forbearance Agreement was made, did that trigger s. 6(1)(

d) of the Act, on the basis that it was not legally appropriatefor CMSC to sue Mr. Korf? [41] For the reasons that follow, the answer to each of those questions is no. (

i) Did the Forbearance Agreement have the effect of suspending the limitation period against Mr. Korf? [42] CMSC’s argument on this point is founded on a number of contentions: a. The Guarantee was a continuing guarantee and contained a provision that it applied to obligations under agreements collateral to theCommitment. b. Mr. Korf exclusively controlled KPL. He exclusively signed documents on behalf of KPL, including the Forbearance Agreement andthe two amendments that extended the Forbearance Period. I have found those as facts above. c. Mr.

Korf approached the Lender and requested a forbearance agreement in 2017. CMSC says this occurred three times. d. Mr. Korf consented to and is bound by the Forbearance Agreement. e. The Forbearance Agreement reset the limitation period for an action on the Guarantee, to begin running again on December 31,2019. f. KPL signed the Forbearance Agreement as agent for Mr. Korf, thereby binding him.

(1) Did Mr. Korf agree by his actions or in writing to be personally bound by the Forbearance Agreement? [43] By now it should be clear that by not having secured Mr. Korf’s signature on the Forbearance Agreement in hispersonal capacity, CMSC is forced to argue that he indirectly or impliedly became a party to or bound by it. CMSC was unable to directthe Court to any jurisprudence directly on point. [44] Forbearance agreements are almost always made in the context of a default that the borrower is incapable ofcuring, at least within the time frame that the lender has given or would give on making demand.

Lenders frequently have considerableleverage in negotiating forbearance agreements. If a loan in default is supported by a guarantee and forbearance terms are beingnegotiated, it would be rare for the lender to be unable to require that the guarantor be made a party to the forbearance agreement. [45] As such, commonly the lender requires any guarantor of the borrower’s obligations to sign the forbearanceagreement and agree to be bound by it. A lender does that for multiple reasons: (

a) to avoid application of the rule (to which there arecertainly exceptions) that a guarantor will be released from his covenant where the creditor and debtor agree to a material alterationwithout his consent, such as in Manulife Bank of Canada v Conlin, (SCC), [1996] 3 SCR 415, (

b) to tie every obligorto the forbearance agreement to avoid any loose ends, and (

c) often to obtain agreement from each guarantor that no defence exists inrespect of their guarantee. The lender may have a desire to continue to support the borrower, but that generally does not detract from thelender’s bargaining power unless the prospects of realization are so dire that continued support is clearly a better alternative thanenforcement.

Even then, the lender generally can get agreement to terms it stipulates unless they are eminently unreasonable. [46] As one example of where a lender benefitted from a guarantor having signed a forbearance agreement, see TFSRT Inc. v Dyck, 2018 ONSC 2617 [TFS], aff’d TFS RT Inc. v Dyck, 2019 ONCA 25. [47] The following are the Guarantee provisions most relevant to this dispute:

4. Upon default in payment of any sum owing by the Borrower to the Lender at any time, the Lender may treat the whole of the indebtedness hereby secured as due and payable and may forthwith collect from the Guarantor the total amount hereby secured. 5.

If the Borrower should default in the payment of the Mortgage or interest or other monies payable pursuant to the Commitment Letter or pursuant to the Security, whenever the same shall become due and payable, then, so often as such default shall occur, the Guarantor shall, subject to the provisions of paragraph 2, pay to the Lender forthwith on demand the Obligations and interest and other monies payable by the Borrower whether due by acceleration or otherwise. 6.

If the Borrower should make default in observing or performing any covenant or agreement required by the Commitment Letter or the Security to be observed or performed by the Borrower, then so often as any such default shall occur, the Guarantor shall, forthwith on demand by the Lender, proceed to remedy such default. 7.

If a default shall occur and if the Guarantor shall fail to make good such default forthwith on demand as herein provided, then as and so often as any such default and failure shall happen, the Lender shall have the right in its discretion to proceed in the enforcement of this Guarantee by any remedy provided or permitted hereby, at law, equity, pursuant to statute or otherwise whether by legal proceedings or otherwise and to recover from the Guarantor, or any of them, such sums as the Guarantor may be liable to pay hereunder by reason of such default and any and all sums so recovered by the Lender shall be applied against the Obligations as the Lender deems appropriate.

The Lender will not be bound or obligated to commence or exhaust its recourse against the Borrower or other persons (including any other Guarantor) or any securities or collateral it may hold or take any other action before being entitled to demand payment from the Guarantor hereunder. 8. If any or all of the Obligations are not recoverable for any reason whatsoever, the Guarantor will, as a separate and distinct obligation, indemnify and save harmless the Lender from and against any and all losses resulting from the failure of the Borrower to pay such Obligations. 9.

The Guarantor are and shall continue to be liable to the Lender as the principal debtor in respect of the Obligations and the obligations of the Guarantor to the Lender under this Guarantee are and shall be continuing, unconditional and absolute and, without limiting the generality of the foregoing, will not be released, discharged, diminished, limited or otherwise affected by (and the Guarantor hereby consents to or waive, as applicable, to the fullest extent permitted by applicable law): (

a) any waiver, modification, restatement or amendment of or supplement to the Commitment Letter, the Security or any agreement collateral thereto, or the Obligations, including any increase or decrease in the principal, the rates of interest or other amounts payable thereunder; (

b) any change in the time, manner or place of payment of or in any other term of the Commitment Letter, the Security or any agreement collateral thereto, or the Obligations, or the failure on the part of the Borrower to carry out any of the Obligations; … (

d) any release, non-perfection or invalidity of any direct or indirect security for any Obligation; (

e) any change in the existence, structure, constitution, name, objects, powers, business, direct or indirect control or ownership of the Borrower or any other person, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Borrower or any other person or its assets; … (

h) any limitation, postponement, prohibition, subordination or other restriction on the rights of the Lender to receive payment of the Obligations; … (

j) any defence arising by reason of any failure of the Lender to make any presentment, demand for performance, notice of non-performance, protest and any other notice, including notice of all of the following: (

i) acceptance of this Guarantee, (ii) partial payment or non-payment of all or any part of the Obligations, and (iii) the existence, creation or incurring of new or additional Obligations; … (

l) any defence arising by reason of any incapacity, lack of authority or other defence of the Borrower or any other person, or by reason of any limitation, postponement or prohibition on the Lender's right to receive payment of the Obligations or any part thereof, or by reason of the cessation from any cause whatsoever of the liability of the Borrower or any other person with respect to all or any part of the Obligations, or by reason of any act or omission of the Lender or others which directly or indirectly results in the discharge or release of the Borrower or any other person, unless such discharge or release shall specifically release the Guarantor or the Borrower or any other persons from their respective obligations, indebtedness or liabilities hereunder or any part thereof, or all or any part of the Obligations or any security or guarantee therefore, whether by contract, operation of law or otherwise; (

m) any defence arising by reason of any failure by the Lender to obtain, perfect or maintain a perfected or prior (or any) lien upon any property of the Borrower or any other person, or by reason of any interest of the Lender in any property, whether as owner thereof or the holder of a lien thereon, being invalidated, voided, declared fraudulent or preferential or otherwise set aside, or by reason of any impairment by the Lender of any right to recourse or collateral; …

(

o) any defence based upon any failure of the Lender to give to the Borrower or the Guarantor notice of any sale or other disposition of any property securing any or all of the Obligations or any guarantee thereof, or any defect in any notice that may be given in connection with any sale or other disposition of any such property, or any failure of the Lender to comply with any provision of applicable law in enforcing any lien upon any such property, including any failure by the Lender to dispose of any such property in a commercially reasonable manner; (

p) any dealing by the Lender whatsoever with the Borrower or other person or any security, whether negligently or not, or any failure to do so; (

q) any defence based upon or arising out of any bankruptcy, insolvency, reorganization, moratorium, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against the Borrower or any other person, including any discharge of, or bar against collecting, any of the Obligations, in or as a result of any such proceeding; or (

r) any other act or omission to act or delay of any kind by the Borrower, the Lender or any other person or any other circumstance whatsoever, whether similar or dissimilar to the foregoing, which might, but for the provisions of this

Section 9, constitute a legal or equitable discharge, limitation or reduction of the Guarantor’ [ sic ] obligations hereunder (other than the irrevocable and unconditional payment in full of all of the Obligations). 10. The foregoing provisions apply (and the foregoing waivers will be effective) even if the effect of any action (or failure to take action) by the Lender is to destroy or diminish the Guarantor's subrogation rights, the Guarantor’s right to proceed against the Borrower for reimbursement, the Guarantor’s right to recover contribution from any other guarantor, or any other right or remedy. 11.

The Lender shall not be concerned to see or inquire into the powers of the Borrower or its directors, or any agents acting or purporting to act on its behalf, and all indebtedness created by the Borrower, its directors or agents under the Commitment Letter or under the Security, in the professed exercise of its powers, shall be deemed to form part of the indebtedness hereby guaranteed, notwithstanding any irregularity, defect or informality, and notwithstanding its creation may be wholly or partly beyond the powers of the Borrower. 12.

The Lender, in its absolute discretion or in the absolute discretion of any officer or agent, and without diminishing. the liability of the Guarantor, may grant time or other indulgences to the Borrower and any other person or persons now or hereafter liable to the Lender in respect of the Mortgage, interest or other monies payable to the Lender and may give up, modify, vary, exchange, renew or abstain from perfecting or taking advantage of the Security in whole or in part and may discharge any part or parts or accept any composition or arrangements or realize upon the Security when and in such manner as the Lender, or any officer thereof, may think expedient, and in no case shall the Lender be responsible for any neglect or omission with respect to the Security.

The Guarantor renounces all benefits of discussion and division. Any account settled or stated by or between the Lender and the Borrower or admitted by or on behalf of the Borrower may be adduced by the Lender and shall in that case be accepted by the Guarantor as conclusive evidence that the balance or amount thereof thereby appearing is due by the Borrower to the Lender. … 14.

It is further hereby expressly declared that the release of any other guarantor of the monies owing to the Lender pursuant to the Commitment Letter shall not affect the liability of the Guarantor, which shall remain unimpaired and still in full force and effect as if the guarantor so released had not been a guarantor of the principal sum or any part thereof. 15. The obligations of the Guarantor hereunder shall be continuing obligations and a new cause of action shall be deemed to arise in respect of each default. 16.

Notwithstanding anything set out in the Commitment Letter and the Security, the Lender will not in any way be responsible for either the holding or the supervision of the insurance policies required to be maintained under the covenants to insure contained in the Commitment Letter and Security, or the verification of the compliance with respect to any such covenants to insure and that the Lender’s permissive power to place insurance on the assets mortgaged to it contained in the Commitment Letter and Security is in its sole and absolute discretion.

The Guarantor acknowledges that the Lender’s action or lack of action in such holding, supervision, verification or in its permissive powers shall in no way diminish the liability of the Guarantor hereunder. 17. The Guarantor hereby acknowledges communication of the terms of the Commitment Letter, the Security and all the provisions herein and therein contained, and hereby consents to and approves the same. 18.

The Guarantor will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged or delivered, all such further things, acts, deeds, transfers and assurances in law as the Lender shall reasonably require for the better accomplishing and effectuating of the intentions and provisions of the Commitment Letter and this Guarantee. [ 48 ] A concerted “belt and suspenders” approach is evident, such that multiple provisions may address the same or similar circumstances. Paragraphs 4, 5 and 6 represent one example – establishing the occurrences on which the Guarantor would become liable to pay.

Paragraph 9 and its subclauses serve two functions. First, they make the Guarantor liable as a principal debtor and establish that it is a continuing guarantee. Second, they attempt to eliminate any defences the Guarantor might have arising from dealings between the Lender and Borrower, the Lender’s dealings with security granted by the Borrower or other changes involving the Borrower.

The repetition and overlap found in guarantees are a product of the many court decisions over the past several hundred years that served to protect guarantors from liability, with lenders responding by adding clause after clause to cover off potential vulnerabilities arising from such jurisprudence. [ 49 ] Of importance here is what those provisions do not do.

Although the Guarantee makes the Guarantor liable for all obligations owed by the Borrower to the Lender, and to waive all manner of potential defences, they do not purport to make the Guarantor a party to the Borrower’s agreements not signed by the Guarantor, nor deem anything to that effect.

[50] CMSC relies on Co-operative Trust Company of Canada v Kirkby, (SK KB), [1986] 6 WWR90 (Sask QB) [Kirkby], where the defendants had signed a mortgage extension agreement as officers of the mortgagor but did not signpersonally as guarantors. When sued, the defendant guarantors argued that the mortgage extension was really a new mortgage, notguaranteed by them, and that it varied the terms of the mortgage so as to release them, as they had not consented to it.

Armstrong J.explained his reasons for rejecting those defences as follows. (The underlining in the passage below mirrors the emphasis placed byCMSC in its Brief.) [10] The defendants did not expressly consent to the changes, orally or in writing but I find that they did consent. Consent is to beinferred from their conduct. Consent need not be express: North Western National Bank of Portland v.

Ferguson (1918), (SCC), 57 S.C.R. 420, at p. 430. [11] Both the letter of April 21 and the mortgage extension agreement of July 13, 1980, were signed by the defendants, although onlyas officers of the corporation, Twelfth Building Ltd., and not personally. But the defendants obviously had complete knowledge of thechanges being effected in the guaranteed mortgage. In addition to having this knowledge, without the defendants’ agreement with thechanges and execution of the documents, the very arrangements of which the defendants complain could not have been effected.

Theirposition is very analogous to that of solicitors in the 1853 English case of Woodcock v. Oxford and Worcester Railway Co., 61 E.R. 551.In that case the solicitors were guarantors of a contract. They, as solicitors, prepared a number of documents used by the principals ineffecting changes in the contract. The solicitors thus had knowledge of the proposed changes and assisted in carrying out the changes tothe contract by the preparation of the documents and, indeed, acting as solicitors of the principal debtors.

There had been no expressconsent, but nevertheless, the court held that the guarantors were not discharged, they having had full knowledge and having assisted inbringing about the changes. [12] In the present case, the overt act of the defendants in executing the documentation resulting in the changes complained of bythem must be taken as constructive assent by them as guarantors to the changes in question. The defendants were not sitting passively onthe side while two other parties effected changes to the guaranteed mortgage.

They actively participated. [Emphasis added by CMSC] [51] CMSC cites nearly ten other decisions that arrived at similar conclusions. [52] The issue is not, however, whether Mr. Korf had knowledge of the Forbearance Agreement. Nor is it whether,as Guarantor, he consented to it such that the Lender need not resort to the various waivers of defences contained in the Guarantee. Therecan be no question that Mr. Korf knew of and consented to the Forbearance Agreement, including in his capacity as guarantor. [53] Instead, the issue is whether Mr.

Korf’s consent and participation should be taken as binding him personally tothe Forbearance Agreement in essentially the same manner that a named party to it would be bound. CMSC offers no authority to supportthat he should be treated as bound in that manner. Rather, they point to the lack of evidence of Mr. Korf as to what his expectations wereand argue that the Court should draw an adverse inference from that lack of evidence, citing Murray v Saskatoon (City) (1951), (SK CA), [1952] 2 DLR 499 (Sask CA). [54] It is correct that adverse inferences may be drawn from a lack of evidence, and in a

summary judgmentapplication, the “best foot forward” principle may work against a party who decides not to call evidence. As stated in Hoffart v Carteri,2020 SKCA 50 at para 40, [2020] 7 WWR 34, a response to a

summary judgment application must not rely solely on denials in pleadingsbut must set out in affidavit material or other evidence facts showing that there is a genuine issue to be tried. [55] In Princess Homes Ltd. v Guenther, 2022 SKQB 141 [Princess Homes], Crooks J. drew an adverse inference ona

summary judgment application when the defendants attempted to argue that their prior bankruptcy triggered the running of a limitationperiod but failed to actually file evidence of the bankruptcy. Specifically, she found that the defendants believed that they still owed thedebt in question such that it survived their bankruptcy. [56] As an aside, it is not accurate to say that Mr. Korf filed no evidence. The parties filed the Agreed Book ofEvidence. The documents contained therein are evidence tendered by both parties. There is no gap in the evidence such as existed inPrincess Homes.

CMSC also provided no evidence as to the Lender’s subjective belief about what it meant that Mr. Korf was not namedas a party, or that the Guarantee was never mentioned in the Forbearance Agreement or the two subsequent amendments. It cannotcomplain that Mr. Korf failed to file evidence as to his own subjective belief. [57] In any event, the determination of whether Mr. Korf is bound by the Forbearance Agreement would not turn onhis subjective belief as to what it meant that he did not sign it in his personal capacity.

As noted by Kalmakoff J.A. in AlumaSafway, indetermining whether a contract has been made – or in this case, whether Mr. Korf agreed to be bound by the Forbearance Agreement –what matters “is not what the parties subjectively had in mind, but whether their conduct was such that a reasonable person wouldconclude that they intended to be bound to certain terms”: AlumaSafway, para 49. [58] Therefore, I decline to draw the inference suggested by CMSC. The question of whether Mr.

Korf agreed to bebound by the Forbearance Agreement in his personal capacity as guarantor is to be determined by the language of that contract, thelanguage of the Guarantee and what a reasonable person would conclude based on the objective circumstances known to both parties (asrequired by Sattva). [59] On review of the Forbearance Agreement in the context of this application, two things jump out. First, it nevereven mentions Mr. Korf, let alone purport to impose obligations on him. Second, there is no mention of the Act, limitation periods, ortolling or suspension of them.

It does not mean that the Forbearance Agreement would not have that effect, vis-à-vis KPL, but it is silentas to anything pertaining to limitation periods, as are both extension agreements. [60] What objective evidence exists? It is undisputed that Mr. Korf signed many documents relating to theForbearance Agreement (including that agreement itself and the two amendments) on behalf of the Borrower company. Mr. Korf stoodto benefit personally from the Forbearance Agreement. Without it, the Lender would have enforced its security against the Borrower andlikely would have sued on the Guarantee much earlier.

The Forbearance Agreement bought time for the Borrower, which Mr. Korf

undoubtedly expected would benefit the company and by extension himself as guarantor. [ 61 ] At paragraph 72 of CMSC’s Reply Brief, they argue as follows: 72. … These cases establish that an individual who signs an agreement dealing with an extant debt or liability of a corporate borrower as signing officer of that corporate borrower can ( on appropriate facts) be found to have consented to the terms of that agreement and therefore be bound by such terms in his or her personal capacity as guarantor as if he or she were a party thereto. [Emphasis (underlining) in original; emphasis (italics) added] [ 62 ] I concur that the case law supports the “consent” part of that proposition.

It may even support that on appropriate facts a court could conclude that a signing officer agreed to be bound to the principal debtor’s agreement (in his personal capacity as guarantor) without having signed it. However, CMSC points to no decision where a court has found such appropriate facts to exist, nor to evidence in this case that by signing agreements as a director or officer of the Borrower, Mr. Korf agreed to be bound personally by the Forbearance Agreement. Without question he consented to it, but I see no evidence of an agreement to be bound by it. [ 63 ] Mr.

Korf could have been named in the Forbearance Agreement as guarantor, and his Guarantee stipulated to form part of the Security referenced in the Forbearance Agreement, such that the Lender was promising to forbear against him personally. He could have agreed by email to sign but neglected to sign that particular line, having signed in many other places. That could reasonably form sufficient objective evidence of an intention to be bound. But none of that occurred here. [ 64 ] If the parties had intended that Mr.

Korf be a party to the Forbearance Agreement and be personally bound by it, that would have been simple to achieve. Instead, on the evidence, the offer made by CMSC required acceptance by KPL only. There is no evidence of any offer to Mr. Korf personally. [ 65 ] Above, I found that nothing in the Guarantee purports to make Mr. Korf a party to agreements he did not sign. Consenting to the forbearance arrangement is a far cry from agreeing to have its terms apply to him personally. [ 66 ] As there is no evidence before the Court to support that Mr.

Korf made an agreement that “expressly provides for” extension of the limitation period applicable to him as guarantor, to find that any such agreement existed the Court would need to do so by inference or implication. As noted by Clackson J. in Sucker Creek , in the context of the Alberta Act , finding the existence of an agreement by inference or implication is not permitted. [ 67 ] In my view, the Act should be interpreted similarly. Express agreement is required, and that did not occur here.

Even if the “clear, unambiguous, and absolute” standard from AlumaSafway is applied, it would not be satisfied in my opinion. [ 68 ] CMSC argues that this creates an absurd outcome. Sometimes omissions have that effect. If a lender leaves a gap in its security, that can create what the lender perceives as an absurd situation. Not every omission by a contracting party (in this case the Lender’s omission to include Mr.

Korf as a party in his personal capacity) can be cured by implication. [ 69 ] CMSC points to Agrifoods International Cooperative Ltd. v South Trail Restaurant Inc. (1997), 195 AR 360 (Alta QB) (QL) [ Agrifoods ] . In Agrifoods , Master Funduk made findings that appear at first glance to apply here, but they do not for essentially the same reasons that I distinguished Kirkby above. [ 70 ] Agrifoods concerned a

summary judgment application by the plaintiff against two individual guarantors. The individuals had guaranteed corporate obligations to the plaintiff, which supplied food products on credits to restaurants operated by the corporate debtor parties. The plaintiff agreed to allow the debtors more time to pay on condition that they acknowledge the outstanding indebtedness. One of the individual guarantors signed the acknowledgement as signing officer for the main corporate debtor. In their statement of defence, the individual guarantors denied the indebtedness.

In respect of the guarantor who had executed the acknowledgement as corporate signing officer, Master Funduk stated: [27] Lewoniuk signed the acknowledgment as signing officer of MT [MT Management Inc.]. It does not now lie in his mouth, as guarantor, to say that there is not a liability by MT to the Plaintiff. He cannot divide his mind into two separate parts, one as officer of MT and one as guarantor, with an impenetrable steel wall between the two parts: [citations omitted].

Where the guarantors are the principals of the debtor corporation and it can act only through them it is difficult to see how the guarantors do not agree to what is signed by the corporate debtor. [ 71 ] One authority relied on by Master Funduk for that proposition was Kirkby . [ 72 ] The guarantee in Agrifoods , given months earlier than the acknowledgement, contained a provision that accounts settled between the plaintiff supplier and corporate debtor constituted conclusive evidence of the balance owing to the supplier. [ 73 ] The central point made by CMSC concerning Agrifoods is this: having signed the acknowledgement as corporate officer, that individual could not deny the existence or amount of debt that he had guaranteed.

Master Funduk found that the supplier and corporate debtor struck a bargain to give the debtor more time for the debt and agreed as to the liability and that the guarantors were bound by that amount for two reasons. One guarantor signed for the debtor, but both were bound by amount because of the provision in the guarantee concerning settlement of accounts between the supplier and corporate debtor. [ 74 ] The portion of Agrifoods relied on by CMSC is thus distinguishable. It pertained to establishment of the existence and amount of the underlying debt.

That is not the issue here; rather, it is whether the Forbearance Agreement operated to suspend the limitation period applicable to Mr. Korf, i.e. , whether Mr. Korf personally agreed to something new by signing as corporate director or officer . [ 75 ] Agrifoods also is distinguishable because the guarantee in that case contained a provision that spoke directly to the defence raised by the guarantors. There is nothing in the Guarantee that addresses suspension of the limitation period (or anything

akin to that) if it were to be suspended from running against the Borrower. [76] In my opinion, for the foregoing reasons, Mr. Korf did not agree by his actions or in writing to be personallybound by the Forbearance Agreement. This argument by CMSC must fail.

(2) Did the Forbearance Agreement re-set the limitation period concerning the Guarantee? [77] Mr. Korf argues that the Forbearance Agreement did not re-set any time for payment but merely was a promiseby the Lender that it would not take enforcement steps for the Forbearance Period provided that the Borrower complied with certainterms. I cannot agree. [78] I accept CMSC’s argument that the Forbearance Agreement represents an agreement by the Lender and theBorrower to amend the terms of repayment of the Indebtedness.

The Mortgage had already matured, and the Borrower was in default.The Borrower acknowledged the Indebtedness (which itself would re-set the limitation period concerning an action against theBorrower). In effect, a new date of August 31, 2018, was set for repayment by the Borrower. [79] CMSC relies on Shook v Munro, (SCC), [1948] SCR 539 [Shook], for the proposition that amortgagee and mortgagor may bind themselves to new times for payment as substitution for what was expressed in the originalmortgage.

That, of course, extends to other loan agreements. [80] The applicability of Shook may be tempered by s. 21 of the Act, which requires an express agreement to extend alimitation period, as I have already discussed. [81] Consideration must flow from the debtor, but that is easily met here. KPL acknowledged that it was providingconsideration. Beyond that, it agreed to enter into contracts for management of its properties and that the property manager wouldreceive all rents paid by tenants.

In the Second Amendment, KPL agreed to engage Colliers (the property manager) to market certain ofKPL’s properties for sale. [82] Neither the Forbearance Agreement nor the amendments contained an express provision about the limitationperiod being suspended. Indeed, there is no express indication in any agreement that the Lender and the Borrower intended to suspendthe limitation period. Still, there was an express agreement. Consistent with Alberta jurisprudence, I find that its terms may bedetermined by implication or inference. The Forbearance Period, as extended by the amendments, ended December 31, 2019.

That daterepresented a new deadline for repayment of the Indebtedness by the Borrower. [83] If the limitation period had started to run on January 2, 2018, it makes no sense to interpret the ForbearanceAgreement as not suspending the limitation period against the Borrower, as that would have left the Lender virtually no time tocommence action if and when the Borrower failed to repay the Indebtedness by December 31, 2019.

That would be an absurd outcome,as the Lender could have, by its own forbearance, lost the ability to recover the Indebtedness from even the Borrower. [84] CMSC further argues that the liability under the Guarantee was contingent on default by the Borrower, and thatonce that default concerning the principal debtor ceased to exist, default under the Guarantee also ceased to exist such that the limitationperiod stopped running. It relies on Western Dominion Investment Company v MacMillan, (MB KB), [1925] 2 DLR442 (Man KB), and Bank of Nova Scotia v Ham (1986), (SK CA), 29 DLR (4th) 427 (Sask CA).

However, thosedecisions are distinguishable because, in those cases, default had never occurred. Here it had occurred, and demand had been made onthe Guarantee.

By the time of the Forbearance Agreement, the limitation period concerning the Guarantee had been running for severalmonths. [85] CMSC places heavy reliance on Canada v Kilback Stock Farm Ltd., 2020 FC 981 [Kilback], and the followingconclusions reached by the court: [95] The Defendants’ submission, in essence, is that the limitation period pertaining to the Individual Defendants as guarantors beganto run on September 30, 2009, the “original default date”, and expired on September 30, 2011.

Therefore, the Minister’s payment toMPCC [Manitoba Pork Credit Corporation] after that date could not revive the expired claim. [96] For the reasons set out above, this position cannot succeed. The second Stay of Default, to which the guarantors implicitlyconsented, extended the default date to March 31, 2013. The limitation period did not start to run until after March 31, 2013, the actualdefault date, being on or about April 1, 2013. The Minister made the guarantee payment on February 14, 2014, being within two years ofthe default date.

Accordingly, the MPCC’s cause of action as against the Defendants was not statute barred when the Minister made thepayment. The Minister’s action was commenced on January 14, 2019, less than six years after the Minister became subrogated to theMCPP’s rights and within the six-year limitation period set out in s 23(4) of the AMP Act. [86] Kilback was decided in the context of the federal Agricultural Marketing Programs Act, SC 1997, c 20 [AMPAct]. The AMP Act provided for advance payments to agricultural producers.

It required the federal Minister to commence proceedingswithin six years after “the day on which the Minister is subrogated to the administrator’s rights”. The defendants were shareholders ofthe corporate debtor who had guaranteed the advance payment to the debtor. The Minister has been found in numerous cases to have aright of action distinct from that of the administrator: Kilback, para 36. [87] The debtor operated in Saskatchewan. The defendant guarantors argued that the two-year limitation periodprescribed by the Act governed, such that the Minister’s attempt to claim against them was statute-barred.

The court rejected that stance,finding that what applied was the six-year limitation period that started when the Minister became subrogated. The limitation periodagainst the guarantors had never expired by operation of the AMP Act. [88] In their arguments in Kilback, the guarantors relied on Walters v Meiner, 2004 BCSC 393 at paras 21-24[Walters], and Continental Steel Ltd. v CTL Steel Ltd., 2015 BCSC 1672 [Continental Steel], aff’d 2018 BCCA 82, on other grounds. In

Walters and Continental Steel, although the principal debtors acted in a way so as to extend the limitation period against themselves,their actions were found not to bind the guarantors. I will return to Walters and Continental Steel below. The court in Kilbackdistinguished them on the basis discussed above, that the six-year limitation period applied, and did not even start to run until theMinister became subrogated. That limitation period had not expired when Canada commenced its action against the guarantors.

Thus, thecore finding in Kilback does not assist CMSC. [89] As well, at paragraph 78 of Kilback, Strickland J. stated: [78] In my view, even though Allen Kilback did not, in his capacity as guarantor, expressly agree to the subject changes, in thesecircumstances consent can be inferred from his conduct on the basis that “the overt act of the defendants in executing the documentationresulting in the changes complained of by them must be taken as constructive assent by them as guarantors to the changes in question”(Co-operative Trust [ (SK KB), [1986] 6 WWR 90] at para 12).

As the President, CEO and authorized signing officerof Kilback Farm, Allen Kilback must not only have known of the changes, he actively participated in them. This is not a situation wherethe guarantor was an arm’s length third party (see Gabbs v Bouwhuis, 2007 BCSC 887 at paras 58-70). However, that discussion related to whether the guarantors were discharged by the amendments to terms for the principal debt, not towhether the guarantors were bound by a change to or re-setting of the limitation period.

It does not speak at all to the issues before thiscourt and does not assist CMSC. [90] Turning to Walters and Continental Steel, they support Mr. Korf’s position. I will return to them again below,but here they stand as authority for the proposition that, in general, when a principal debtor affirms the debt, that does not impact on thelimitation period applicable to the guarantor of the principal debtor’s obligations, at least if the limitation period concerning theguarantor has already started to run (as it had regarding Mr. Korf when the Forbearance Agreement was made).

See Walters, para 24,and Continental Steel, para 24. Each of those decisions was based on a provision in the British Columbia limitations legislation, buts. 11(2) of the Act operates in substantially the same way as the provisions relied on in those cases. [91] Accordingly, CMSC’s argument that that the Forbearance Agreement re-set the limitation period for theBorrower, and by extension re-set it for Mr. Korf as guarantor, must fail. Such re-setting cannot be by implication with respect to aguarantor who is not a party to the Forbearance Agreement.

(3) Did KPL sign the Forbearance Agreement as agent for Mr. Korf, and thus trigger the application of s. 11(2) of the Act? [92] The answer to this question is no. The issue was addressed head on in both Walters and Continental Steel. Ineach of those cases, the guarantor was the sole director and shareholder of the principal debtor. A similar agency argument wasadvanced. Quoting Walters, the court in Continental Steel analysed the issue as follows: [163] Macaulay J. was faced with a similar issue in Walters v. Meiner, 2004 BCSC 393, [2004] B.C.W.L.D. 601, a case with similarfacts.

Meiner was the sole shareholder and operating mind of Brehner Construction Ltd., which had borrowed money from Walters. Theloans were evidenced by a series of promissory notes. Meiner had personally guaranteed each of the loans. The guarantee did not providefor a demand to be made on Meiner before his obligations under the guarantee were due. Despite Brehner Construction Ltd. making apayment after its default, Macaulay J., dismissed the action against Meiner on the guarantees. In doing so, Macualay J. stated at paras. 21- 24: [21] Brenher was the sole principal debtor on each promissory note. Mr.

Meiner was a guarantor in each case but never a principaldebtor. The fact that he was also a director and officer of Brenher does not create an agency relationship as contended. The significanceof this finding is plain upon a review of ss. 5(7) and (9) of the Limitation Act. This is because s. 5(7) defines who is bound by aconfirmation and s. 5(9) provides expressly that a confirmation made by an agent "has the same effect as if made by or to the principal". [22] Unless Mr. Meiner is bound directly under s. 5(7), there has been no confirmation of the cause of action against him.

Counselagreed that the limitation period ran against Mr. Meiner in tandem with the limitation period against Brenher. This was right because theterms of the particular guarantee did not modify the general rule that the liability of the surety and the principal debtor are coterminous. [23] Mr. Meiner’s obligation under the guarantee always existed. The terms of the guarantee did not import any requirement that hisobligation was to be triggered only by a demand.

As each promissory note was payable on demand, the cause of action against both theprincipal debtor and the guarantor arose at the time of making the note or, at the very latest, at the time of the debtor’s default in failingto make the first monthly interest payment. I have considered and applied the reasoning in Canadian Imperial Bank of Commerce v.Pittstone Developments Ltd., [1985] B.C.J.

No. 3013 (S.C.), although it leads to a different result here because of the lack of a trigger inthe guarantee under consideration. [24] Despite the coterminous nature of the guarantee, part payment by the principal debtor does not extend the running of thelimitation period against a guarantor. Section 5(7) clearly limits the effect of a confirmation. The subsection provides that a person “isbound by a confirmation only if” any of the enumerated circumstances apply. The person bound here must be either the maker Brenheror a successor of Brenher in relation to the cause of action: ss. 5(7)(

a) and (b). As Mr. Meiner is neither a successor of Brenher nor itsprincipal in the sense contemplated by s. 5(9), he cannot be bound by the confirmation. Accordingly, the action against him personally isout of time and must be dismissed. [164] I agree with and adopt Macaulay J.’s reasoning in Walters. I find that Continental is barred from enforcing the guarantee againstPride. By virtue of s. 5(7) of the Limitation Act, a confirmation of a cause of action only binds the person that makes it.

Here, theconfirmations that occurred were by Pride in his capacity as president of CTL and only confirmed the debts owed by CTL to Continental,not the obligations of Pride personally. Likewise, the 2010 Lloyd Reallocation did not extend the limitation period in respect of thepotential cause of action against Pride as guarantor. Continental is therefore statute barred from claiming against Pride personally on theguarantee. [Emphasis added] [93] Earlier in Continental Steel, the Court considered the agency question, finding that absent clear evidence to the

contrary, a corporation is presumed to act for itself rather than as agent for its shareholder. Only in rare circumstances, even where thereis a single controlling shareholder, will the corporate veil be pierced in order to attribute a corporation’s actions to its shareholders.

SeeContinental Steel, paras 154-159, and Edgington v Mulek Estate, 2008 BCCA 505 at paras 20-26, [2009] 3 WWR 440. [94] For Saskatchewan authority to similar effect in a different context, see Holmes v Jastek Master Builder 2004Inc., 2019 SKCA 132 at paras 118-122, [2020] 6 WWR 386 [Jastek], and Tridont Leasing (Canada) Ltd. v Saskatoon Market Mall Ltd., (SK CA), [1995] 6 WWR 641 [Tridont]. It is not impossible to pierce the corporate veil, but that must be done onevidence. Tridont set out six factors to be considered: [22] … (

a) whether the profits were “treated” as profits of the parent or of the subsidiary; (

b) whether the individuals involved in the day-to-day operations were appointed by the parent; (

c) whether the parent corporation was the "brains" behind the day-to-day operation; (

d) whether the parent corporation made policy and financial decisions that were merely carried out by the subsidiary; (

e) whether the profits were directly traceable to the skill and direction of the parent; and (

f) whether control by the parent was constant, as would be the case in a typical principal-agent situation, or merely periodic and longrange, as might occur in a typical corporation-shareholder situation. [95] To be clear, even if evidence supporting the six factors is present, that cannot lead to a piercing of the corporateveil or a finding that the corporation acted as agent for the shareholder in every case where there is a single shareholder and director, oreven the majority of cases.

If that were so, there would effectively be no concept of separate corporate personality for any suchcorporation. [96] Some evidence addressing all or most of those factors is present here, at least at a high level, but that is notenough. As stated in Tridont, courts pierce the corporate veil sparingly. The corporate veil was pierced in Jastek, but that was to find thatone corporate entity was the alter ego of another – that there was such a close relationship between them that what appears to relate to oneactually relates to the other.

It is a much larger step, taken very rarely, to pierce a corporate veil to pin liability on an individual. Noauthority cited by CMSC involved the placement of liability on an individual. [97] CMSC argues that Mr. Korf carries the onus of proof on this question. I do not agree. As observed inContinental Steel, there is a presumption against agency unless evidence is present to establish such a relationship.

No more evidenceexists here than in any situation where a corporation enters into an agreement that is signed by its principal, a common scenario. [98] I find that in these circumstances KPL acted only on its own behalf and not as Mr. Korf’s agent.

(4) Conclusion [99] Each of the three arguments advanced by CMSC under this heading has failed. Accordingly, the question ofwhether the Forbearance Agreement had the effect of suspending the limitation period against Mr. Korf is answered in the negative. (ii) When the Forbearance Agreement was made, did that trigger s. 6(1)(

d) of the Act, on the basis that it was not legally appropriatefor CMSC to sue Mr. Korf? [100] For ease of reference, I will reproduce s. 6(1) here. It comprises the discoverability provision in the Act. 6(1) Unless otherwise provided in this Act and subject to subsection (2), a claim is discovered on the day on which the claimant firstknew or in the circumstances ought to have known: (

a) that the injury, loss or damage had occurred; (

b) that the injury, loss or damage appeared to have been caused by or contributed to by

an act or omission that is the subject of theclaim; (

c) that the act or omission that is the subject of the claim appeared to be that of the person against whom the claim is made; and (

d) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it. [101] The focus of CMSC’s argument here is

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