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In Bank of Montreal v. Utility Engineers Corporation, the Ontario Court of Appeal confirmed that an individual guarantor remained liable under a $500,000 personal guarantee she gave in connection with her son’s company.  The decision confirms the principle that lenders can enforce personal guarantees summarily, provided the underlying debt, guarantee, and default are all proven and no credible defense exists.

The corporate borrower had obtained an overdraft facility from the bank, secured by a general security agreement and personal guarantees from its principal, Meleknia, and his mother. Both were corporate officers; the mother was also a 50 percent shareholder.

When the company defaulted, the bank demanded repayment and obtained default judgments against the company and Meleknia, together with summary judgment against the mother for $500,000, plus nearly $100,000 in pre-judgment interest, and $50,000 in costs.

On appeal, Meleknia’s mother – who represented herself – argued that the motion judge was wrong to grant summary judgment against her.  She claimed the bank owed her a duty to explain the guarantee, given she was an immigrant with limited English skills who had mainly been a stay-at-home mother. She claimed not to understand what she had signed, and raised the defence of non est factum (“not my act”), which she said had been wrongly rejected by the motion judge. She also argued that her special mother-son relationship with Meleknia created a duty for the bank to inquire, since she derived no benefit from the overdraft facility.

The Court of Appeal rejected both of those arguments; the motion judge was free to grant summary judgment here.

The material facts were all undisputed: The loan existed, the mother had executed the guarantee, the corporation defaulted, and the bank had made a valid written demand for payment. The familial connection between Meleknia and his mother did not, by itself, create a presumption of undue influence, or a duty to investigate on the bank’s part.

The court also noted that, absent a special relationship, a lender has no obligation to explain loan documents to a guarantor.  Nor was the mother as unsophisticated as she professed. She was a licensed real estate broker, and was fluent in English.  She was also a director, officer, and shareholder of the borrower corporation, and accordingly had a direct interest in its finances. Her decision to forego legal advice and to not read the document – which was clearly titled “Guarantee for Indebtedness of an Incorporated Company” – were a function of her own neglect, and not a basis to avoid liability under the non est factum principle. The mother’s appeal was therefore dismissed.  See: Bank of Montreal v. Utility Engineers Corporation, 2025 ONCA 311.