Business Development Bank of Canada v. Date:, 2012 MBCA 58

Citation: Business Development Bank of Canada v. Date: 20120528 Sokolow et al., 2012 MBCA 58 Docket: AI 11-30-07680 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Freda M. Steel Madam Justice Holly C. Beard Mr. Justice Alan D. MacInnes BETWEEN : BUSINESS DEVELOPMENT BANK ) OF CANADA ) ) (Plaintiff) Respondent ) D. Sokolow ) on his own behalf - and - ) ) DAVID SOKOLOW ) S. A. Zinchuk ) for the Respondent (Defendant) Appellant ) ) - and - ) Appeal heard and ) Decision pronounced: HARRY MANN ) May 28, 2012 ) (Defendant) ) BEARD J.A. (for the Court): I. THE ISSUE 1 The master granted the motion of the plaintiff, Business Development Bank of Canada, for

summary judgment against both defendants, thereby finding them jointly and severally liable on each of two personal guarantees. The defendant Mr. Sokolow appealed that decision to the Court of Queen’s Bench, where he had partial success, in that the appeal judge set aside the

summary judgment regarding the later of the two guarantees and ordered a trial to determine Mr. Sokolow’s liability under that guarantee, which was signed in 1999. He confirmed the master’s decision ordering

summary judgment against the defendants regarding the earlier guarantee signed in 1997. 2 The co-defendant, Mr. Mann, has not filed any appeals and has not participated in either appeal filed by Mr. Sokolow. 3 The ground of appeal advanced by Mr. Sokolow is that the appeal judge erred in finding that the two guarantees were separate arrangements when, by postponing their entire position to the Royal Bank of Canada (the RBC), the plaintiff treated both guarantees as one overall security. II. THE FACTS AND DECISIONS BELOW 4 The facts relevant to this matter are not at issue. Mr. Sokolow and Mr.

Mann were two of the principals of Barcode Systems Inc. (Barcode) and Mr. Sokolow was the president. Barcode had arranged credit with Deutsche Bank, as the primary creditor, and had a secondary credit arrangement with the plaintiff. To support the debt to the plaintiff, the two defendants signed a personal guarantee with the plaintiff in April 1997 (the first guarantee). That guarantee was in the maximum amount of $75,000 to guarantee Barcode’s debt to the plaintiff. 5 Barcode changed primary creditors in 1999 and Mr. Sokolow, on its behalf, arranged new primary credit with the RBC.

At the same time, Barcode arranged another secondary credit facility with the plaintiff, which was supported by a new personal guarantee signed by both defendants, this time in the maximum amount of $250,000 (the second guarantee).

6 In December 2003, the RBC had an interim receiver appointed by the court, and Barcode went bankrupt in 2004. OnFebruary 9, 2004, the plaintiff made a demand on each of the defendants for payment under both guarantees. The defendants did notpay, so the plaintiff commenced these proceedings in October 2004.

The amount owing under the first guarantee was $45,059.41 plusinterest at the rate of $55.33 per day. 7 None of these facts were denied by the defendants, so the master found that the plaintiff had discharged the onus ofestablishing a prima facie case. 8 The defendants’ defence regarding the first guarantee, and the position that they took before the master, was that anyindebtedness under that guarantee was subsumed in the financing arrangements that led to the second guarantee. 9 The master found that the documentary evidence, particularly the letter of offer dated March 25, 1999, by the plaintiff toBarcode, made it clear that the new loan was in addition to the existing loan.

That letter states, “This loan is in addition to the existingloan on which $232,000.00 is outstanding.” On that basis, she found the defendants liable under the first guarantee. 10 In his decision, the appeal judge stated as follows regarding the first guarantee (at para. 16): …. The position advanced by [the plaintiff’s] counsel on this issue with respect to this 1997 agreement is correct. There is noevidence in Mr. Sokolow’s only affidavit filed with respect to this part of the claim, and all of the documentary evidence relevant to thefirst guarantee supports [the plaintiff’s] position.

The new financing arrangements put in place in the spring of 1999 between Barcodeand [the plaintiff] clearly identified the 1999 loan as being “in addition to the existing loan on which $232,000.00 is outstanding” …. [The plaintiff’s] affidavit evidence in support of its motion for

summary judgment, at least as regards its claim on the first guarantee, wasnot cross-examined upon and is not disputed by any evidence. Mr. Sokolow’s repeated submissions to the effect that this first loan wassomehow “subsumed” when new and additional financing was arranged in 1999 is simply not evidence. …. III. STANDARD OF REVIEW 11 The standard of review on an appeal of a motion for

summary judgment was set out by this court in Homestead Properties(Canada) Ltd. v. Sekhri et al., 2007 MBCA 61, 214 Man.R. (2d) 148. Freedman J.A., in a unanimous decision, stated as follows (at para.13): …. Moreover, the granting or denying of a motion for

summary judgment is in a judge’s discretion, and that discretion should notbe overturned unless the judge has misdirected himself or if his decision is so clearly wrong as to amount to an injustice (Elsom v.Elsom, (SCC), [1989] 1 S.C.R. 1367; 96 N.R. 165, at 1375; see also R. v. Regan (G.A.), 2002 SCC 12 ,[2002] 1 S.C.R. 297; 282 N.R. 1; 201 N.S.R. (2d) 63; 629 A.P.R. 63; 2002 SCC 12, at para. 117). 12 This is the standard of review that applies in this matter. IV. ANALYSIS AND CONCLUSION 13 After reviewing the material filed on the appeal and hearing Mr.

Sokolow’s arguments, we are not convinced that the appealjudge erred in his decision regarding the first guarantee. There is nothing in either the documents or the evidence on this appeal tosupport the argument that the first loan and Mr. Sokolow’s personal guarantee regarding that loan were subject to the buy-backagreement. The two loans remained separate obligations. Thus, even if the first loan and related guarantee were covered by thepostponement agreement, that does not also make them subject to the buy-back agreement. V. DISPOSITION OF THE APPEAL 14 The defendant Mr.

Sokolow has not convinced us that the appeal judge made any error in finding that the two guaranteeswere separate obligations and in granting

summary judgment against Mr. Sokolow under the first guarantee. 15 We would, therefore, dismiss the appeal, with costs to the plaintiff. __________________________ J.A. __________________________ J.A.

_________________________ J.A.