Unenforceable Guarantees: Decision Under Appeal!

In our recent client update entitled Unenforceable Guarantees: Lenders Take Note! we reviewed the surprising Ontario Superior Court decision in Royal Bank of Canada v. Samson Management & Solutions Ltd. This case, heard in June 2012, addressed the enforceability of guarantees and has been of great interest to all lenders, borrowers, guarantors and their counsel given the unexpected outcome. We have since learned that the decision is under appeal and that the appeal is scheduled to be heard on January 9, 2013.

THE CASE UNDER APPEAL

In this case, Royal Bank of Canada ("RBC") pursued summary judgment on a guarantee from Ms. Cheryl Cusack who defended the action on the basis that the guarantee was unenforceable. Ms. Cusack is the spouse of the defendant, Jason Brasseur, the principal of the defendant Samson Management and Solutions Ltd. ("Samson"). Samson and Mr. Brasseur did not file any material or appear or be represented in court and so summary judgment was