Burin Peninsula Community Business Development Corporation v. Grandy

Date: 20101117 Docket: 09/41 Citation: Burin Peninsula Community Business 2010 NLCA 69 Development Corporation v. Grandy, IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN: BURIN PENINSULA COMMUNITY BUSINESS DEVELOPMENT CORPORATION APPELLANT AND: JOHN GRANDY AND SHARON GRANDY RESPONDENTS Coram: Mercer, White and Harrington, JJ.A. Court Appealed From: Supreme Court of Newfoundland & Labrador, Trial Division 2000 06T 0014 Appeal Heard: June 23, 2010 Judgment Rendered: November 17, 2010 Reasons for Judgment by Harrington, J.A. Concurred in by Mercer and White, JJ.A. Counsel for the Appellant: Corwin Mills, Q.C. Counsel for the Respondents: Donald A. MacBeath, Q.C. Page: 2 Harrington, J.A.: [1] The appellant appeals from a decision of a Trial Division judge who held that a personal guarantee executed by the respondent, John Grandy (“Grandy”) in favour of the appellant (“Corporation”) at the closing of a commercial loan agreement was unenforceable as it was obtained through undue influence. The Corporation also appeals the decision that its claim for the recovery of the deficiency amount allegedly owing under the guarantee was not actionable due to the absence of a proper demand for payment in accordance with its terms. Prior to the commencement of the trial, the Corporation obtained leave to discontinue the proceeding against the respondent, Sharon Grandy. BACKGROUND [2] Following the onset of financial difficulties in 1994 for Grandy’s company, J. & J. Carpentry and Construction Limited (“J. & J. Carpentry”), Mr. Grandy approached the Corporation for new financing when his existing lender called its loans. Security for the prior loan, then in default, included personal guarantees from the Grandys. [3] Mr. Grandy had had no prior dealings with the Corporation which was, effectively, a lender of last resort for J. & J. Carpentry. It agreed to lend J. & J. Carpentry $75,000 under the terms of a commitment letter drafted by the Corporation and accepted by Mr. Grandy. The existing lender was threatening to commence enforcement proceedings when Mr. Grandy sought to draw down the loan proceeds. A period of approximately five weeks elapsed between the date of the commitment letter and the closing date. [4] The security portion of the Corporation’s loan commitment to Mr. Grandy made no reference to personal guarantees being required from Mr. Grandy or his wife. However, in the written instructions to its solicitor, the Corporation listed personal guarantees as required security. At the closing on April 25, 1994 the appellant’s solicitor presented draft guarantees to Mr. Grandy and his wife for execution. Mr. Grandy protested that personal guarantees were not a requirement of the Corporation’s loan commitment which he had accepted. The trial evidence confirmed that the loan proposal approved by the Corporation’s board of directors did not include a requirement of guarantees from the Grandys and that the Corporation had made other small business loans without requiring personal guarantees. Page: 3 [5] When Mr. Grandy protested to the Corporation’s counsel that the guarantees were not a requirement, a telephone call was placed to the appellant’s executive officer, Guy Edwards, who insisted that the guarantees were a necessary requirement for the loan consistent with the Corporation’s lending policy. He advised Mr. Grandy that he had the option of delaying the closing to allow time for his objection to be reviewed by the Corporation’s directors though he stated that it was unlikely that the directors would approve the advance of the loan without the execution of the guarantees. The trial judge also found that Mr. Grandy was in a “precarious debt position” at that time as the existing lender had called its loan and was pressing for repayment. [6] Mr. Grandy testified that after hearing Mr. Edwards’ telephone response, he asked for advice from the Corporation’s legal counsel with whom he had had prior personal dealings and who he believed was also providing advice to him in the transaction. He was advised by that legal counsel that he ought to sign the guarantee. Mr. Grandy was not advised that he should obtain independent legal advice. Mr. Grandy and his wife ultimately signed the guarantees and the loan proceeds were disbursed. At trial, there was no dispute that Mr. Grandy was aware of the nature and purpose of a personal guarantee. The terms of the guarantee provided that no enforcement proceeding was to be instituted until a demand for payment had been made. [7] By early 1999 the fortunes of J. & J. Carpentry had not significantly improved, the appellant’s loan fell into arrears and the Corporation proceeded to enforce its security. Correspondence to the Grandys followed respecting the loan and the guarantees. [8] In a letter dated March 8, 1999 Mr. Edwards’ successor advised Mr. Grandy that his proposed financial restructuring plan had been rejected by the Corporation’s board. He advised that after a proposed sale of equipment under the primary security, “the appropriate action will then be undertaken” to collect any deficiency owing on the loan pursuant to the personal guarantees. [9] In a letter dated June 11, 1999 the Corporation’s counsel notified Mr. Grandy and his wife that the failure to make monthly payments on the loan was a breach of contract and requested that Mr. Grandy make “immediate payment of the monies owing to bring your loan up to date”. Subsequently, Page: 4 the appellant commenced legal action for recovery of a deficiency amount of $71,280.03 and accrued interest. DECISION OF TRIAL JUDGE [10] The statement of defence of the Grandys pleaded the unenforceability of the personal guarantees alleging that they were obtained under duress. However, the evidence and legal argument by both counsel at trial focused on the applicability of the doctrine of undue influence. The trial judge found the guarantees were unenforceable solely because of his finding of undue influence. [11] The second ground upon which the trial judge found that the claim should be dismissed was that a proper demand had not been made on the guarantees in accordance with their terms and thus the claim was not actionable. [12] On the issue of undue influence, the trial judge made key evidentiary findings at para. 37 of his reasons for judgment as follows: [37] In adopting the foregoing as the basis in equity upon which the facts of this case ought to be considered, I note the following: 1. Personal guarantees were not included in the written offer to finance which was accepted. 2. Consistent with Mr. Grandy’s understanding that no personal guarantee was discussed or agreed upon elsewhere, neither the loan application, the loan proposal drafted by Mr. Edwards or the minute of the Board approving the financing referenced a requirement for a personal guarantee. 3. Mr. Grandy and Mrs. Grandy protested the request for the personal guarantee. 4. In the circumstances it is reasonable to conclude that some reliance on Mr. White was present in the decision to execute. Had Mr. White given advice upon inquiry as to the Grandy’s view of the facts he could have chosen to propose their taking time to consider the question of their obligation to provide the guarantee. As I will note later, however, the relationship to be assessed for the purpose of alleged undue influence is as between the Plaintiff and the Defendant John Grandy. As I also will note later, the presence of Mr. White does not give rise to a presumption of undue influence. Page: 5 5. Mr. Edwards was phoned by Mr. Grandy at the time of signing. Mr. Edwards and the Plaintiff have to be taken to have known that Mr. Grandy felt no obligation to sign the guarantee. 6. The Plaintiff has to be taken to have known that Mr. and Mrs. Grandy had not provided a prior agreement by which the granting of a personal guarantee was a condition to the financing. 7. The personal guarantee was insisted upon in the absence of such condition when the Plaintiff has received this objection. The Plaintiff has by its Executive Director communicated to Mr. Grandy at this moment of protest that, had the matter been taken back to the Board, the transaction might not be approved. 8. The Plaintiff has to be taken as aware that, with no previous request for a guarantee, Mr. and Mrs. Grandy did not want to give the guarantee, were under some financial pressure to sign given Mr. Grandy’s inability to have his company meet its current obligations having no other alternate source of financing to continue operations and, while Mr. White is present, representing Plaintiff’s interests, Mr. Grandy will not have had a genuine opportunity to assess the merits of the transaction then being required of him. [13] The trial judge then focused on the actions of the Corporation’s executive director and its legal counsel at the time of the closing. He found at paras. 45 and 46 of his reasons: [45] The fact remains that the Plaintiff was aware of Mr. Grandy’s position at the time of signing and accepted the guarantee without having provided him a genuine opportunity to assess the merits of his position in that transaction. I cannot be satisfied that Mr. Grandy’s recollection of Mr. Edward’s (sic) advice to him that, if it went back to the Board there was the possibility that Mr. Grandy would be turned down or not approved, presented a reasonable option to Mr. Grandy by which I could infer that a genuine opportunity to assess the merits of Mr. Grandy’s position had been provided. [46] As noted, at this critical moment, the Plaintiff ought to have considered whether the solution then presented by it was the appropriate manner by which a genuine assessment of Mr. Grandy’s position was available so as to secure the execution of the guarantee as an expression of his free will. At this moment Mr. Grandy was protesting directly to the Plaintiff’s representative. I have to take the position of the Plaintiff at this moment as discouraging any opportunity for such assessment. In my view, suggestions of the likelihood of being turned down or not approved have to be received as promoting immediate execution of the Page: 6 guarantee. Consequently, I am of the view that, in the signing of the guarantee there existed the combined influence of: (a) the weaker party’s needs in his company’s precarious debt position, (b) ignorance in the lack of knowledge reasonably necessary for an informed assessment by him as to whether there was a basis, legal or ethical, by which he might advance a reconsideration by the Plaintiff of its very recent requirement, and (c) the exertion of pressure to proceed by the stronger party as I have just noted in the Plaintiff’s promotion of immediate execution. As quoted by me at paragraph 36 supra, (McGuinness at paragraph 4.62), it is the combined influence of these three features that gives rise to undue influence as an available defence to enforcement of the obligation. At the same time there is absent any suggestion either that advice be obtained or time be taken to reflect. In any event, at a minimum, there is absent the provision of an opportunity to assess the merits of the transaction. In the face of the absence of any previous request or agreement for the guarantee, Mr. Grandy’s objection and the Plaintiff’s immediate response, I cannot view the assumption of this obligation as being a voluntary act for the reasons noted. [14] The trial judge also found that the claim for a deficiency by the appellant against Mr. Grandy was not actionable principally due to the imprecision of the purported written demands for payment. ISSUES [15] The issues on this appeal are: a. Were the personal guarantees executed in favour of the Corporation by the Grandys unenforceable because they were obtained through undue influence or under economic duress? b. Did the learned trial judge err in finding that the claim on the guarantees was not actionable in the absence of a proper demand for payment in accordance with their terms? Page: 7 LAW AND ANALYSIS - Economic duress or undue influence [16] At trial, the parties made submissions, and the trial judge made his decision based on the doctrine of undue influence, not duress, even though the doctrine of duress was pleaded in the statement of defence. In like manner, the appeal in this Court was argued solely on the correctness of the finding of undue influence. [17] Notwithstanding this focus on undue influence, both at trial and during appellate argument, the panel concluded that the factual matrix of this case did, in fact, engage the possible applicability of the doctrine of economic duress which was the only defence set forth in the pleadings and accordingly invited additional submissions from counsel on that issue. Counsel for the appellant submitted that the following points militated against a finding of economic duress: (i) the Corporation merely advised that the loan proceeds would be released upon the guarantees being signed “as required by its lending policy and that the Corporation was merely stating a condition of the loan”; (ii) the Grandys had an opportunity to ask for a waiver from the board but declined the offer; and (iii) in the alternative, “if there was any pressure or influence on the respondent to sign, it was not that of the appellant or caused by the appellant, but due to the respondent’s own financial situation”. [18] It is worth emphasizing at this point that the Corporation’s offer of financing included a requirement for debenture security but did not include provision of personal guarantees from the Grandys. [19] The concept of economic duress has emerged from the common law of contract. Professor Waddams in The Law of Contracts, 6th ed. (Toronto: Canada Law Book, 2010) at p. 374 has opined that while ordinary business pressures in commercial dealings between parties are tolerated by the courts, the English authorities culminating in Pao On v. Lau Yiu Long, [1980] AC 614 (PC) have held that “a coercion of will which vitiates Page: 8 consent” may constitute economic duress affecting the enforceability of contracts. [20] In Pao On, an agreement made under a threat of breach of an existing contract was nonetheless held to be enforceable. The Privy Council held that the promisor had a practicable option to refuse to amend the agreement and also held that the inconvenience of resorting to a legal remedy was not by itself, proof of duress. [21] To the extent that threats of non-performance are an integral part of the analysis to determine the presence of coercion, there is a useful commentary by Professor Graham Virgo in The Principles of the Law of Restitution, 2d ed. (Oxford: Oxford University Press, 2006) at pp. 206-207: … The test which has been adopted for determining whether the threats were a sufficient cause is expressed by asking whether the threats coerced the claimant’s will so as to vitiate his or her consent. The most important statement of this coerced will principle can be found in the judgment of Lord Scarman in Pao On v Lau Yiu Long. In determining whether there was a coercion of will such that there was no true consent, it is material to inquire whether the person alleged to have been coerced did or did not protest; whether, at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as an adequate legal remedy; whether he was independently advised; and whether after entering the contract he took steps to avoid it. All these matters are … relevant in determining whether he acted voluntarily or not. [22] The Supreme Court of Canada recognized the existence of economic duress as a potential defence to contractual enforcement in Martel Building Limited v. Canada, 2000 SCC 60, a case dealing with economic loss, the tendering process, and the renegotiation of a lease. The court simply acknowledged that: [70] … to extend the tort of negligence into the conduct of commercial negotiations would introduce the courts to a significant regulatory function, scrutinizing the minutiae of pre-contractual conduct. It is undesirable to place further scrutiny upon commercial parties when other causes of action already provide remedies for many forms of conduct. Notably, the doctrines of undue influence, economic duress and unconscionability provide redress against bargains obtained as a result of improper negotiation. As well, negligent misrepresentation, fraud and the tort of deceit cover many aspects of negotiation which do not culminate in an agreement. Page: 9 [23] Greater Fredericton Airport Authority Inc. v. NAV Canada, 2008 NBCA 28 reviewed the law in the area of economic duress as it pertains to a threatened breach of an existing contract. Justice Robertson recognized: … an “incremental” change in the traditional rules by holding that a variation unsupported by consideration remains enforceable provided it was not procured under economic duress. This refined approach leads us to consider how the contractual variation in issue was procured. In my view, the Airport Authority had no “practical alternative” but to agree to pay money that it was not legally bound to pay. Nav Canada implicitly threatened to withhold performance of its own obligation until the Airport Authority capitulated to the demand that it pay the cost of the navigational aid. However, the absence of practical alternatives is merely evidence of economic duress, not conclusive proof of its existence. The true cornerstone of the doctrine is the lack of “consent”. In that regard, the uncontroverted fact is that the Airport Authority never “consented to” nor “acquiesced in” the variation, as is evident from the letter agreeing to payment “under protest”. [24] It is my view that the legal analysis in Greater Fredericton Airport Authority is of assistance in determining whether this case should have been decided on the basis of the presence of economic duress and not on the basis of undue influence. The case on appeal involves a variation of a term of an existing contract through conduct which was allegedly coercive. [25] My review of the authorities leads me to the conclusion that a finding of economic duress is dependent initially on two conditions precedent: (i) the contractual variation must be extracted by pressure in the form of a demand or threat; (ii) the exercise of pressure must be such that the coerced party has no practical alternative but to comply with the demand or threat. [26] If these two conditions are met, the focus shifts to whether the party consented to the contract variation. The factors to be considered are (i) whether the promise was supported by consideration (ii) whether the coerced party protested the variation or executed it on a “without prejudice” basis and (iii) whether the coerced party took steps to disavow the variation on a timely basis. [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 Page: 10 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. [28] At the core of the trial judge’s reasoning was the precarious financial position of the Grandys and their lack of alternatives since the Corporation was their lender of last resort and the existing lender was pressing for repayment. They were advised at the closing that the funds would not be released without the execution of personal guarantees which were not part of the original loan commitment. They were told that they could take time to consider their position which could include a request to the Corporation’s directors for a waiver. However, they were advised by Mr. Edwards that it was not likely the Corporation would advance the funds without the additional security. The Corporation’s counsel who in their minds was also the Grandys’ counsel advised that they should execute the guarantees in the circumstances. He did not advise them that it would be wise to seek another opinion. [29] The trial judge decided that it was not necessary to consider whether J. & J. Carpentry was entitled to the loan proceeds without the guarantees. Instead, he focused on the question of whether the weaker party, Mr. Grandy, had time to properly assess his position. While this aspect was relevant to an analysis of whether the Grandys had a practical alternative, it is my view that the binding nature of the loan agreement entitling J. & J. Carpentry to the loan proceeds without guarantees was a critical starting point for a determination of whether coercion arising from the actions of the Page: 11 Corporation’s executive director and legal counsel, acting together, led to the variation of an existing contract. [30] All of these factors suggest that the appropriate legal analysis of the facts of this case is based on the doctrine of economic duress not that of undue influence. This appears to be a classic case where the lender’s representative, mindful of the absence of a contractual provision requiring personal guarantees, coerced the principal shareholders of the borrower who were under pressure from an existing lender to agree to vary the terms of an existing loan commitment without the provision of further consideration. [31] Though the status of legal counsel for the Corporation was held by the trial judge not to warrant a finding of a fiduciary relationship leading to a presumption of undue influence the advice given by that counsel was a significant part of the circumstances surrounding execution of the guarantees. (See Trial Decision, para. 37). The absence of independent legal advice can be relevant in cases of economic duress especially involving variation of existing contracts. I agree with the analysis of Robertson J.A. in Greater Fredericton Airport Authority that the absence of legal advice in cases where knowledgeable parties are involved may nevertheless be relevant when a party “entered into an improvident bargain which is attacked on the grounds of unconsionability, undue influence and duress”. Robertson J.A. suggested that in most cases where economic duress is pleaded, the parties are commercial entities with ready access to legal counsel. However, he further opined at para. 60: … there may be cases where independent legal advice becomes a relevant consideration in cases involving a contractual modification. [32] Notwithstanding that Mr. Grandy knew the nature and effect of a personal guarantee, he did not appear to know whether the Corporation was bound by the terms of the loan commitment. He consulted the Corporation’s lawyer who had represented him in the past. There was no suggestion, let alone insistence, by the Corporation’s counsel or its executive officer that Mr. Grandy obtain independent professional advice. [33] While the precarious financial position of the Grandys appears to have been the primary reason as to why no practical alternative was available to them, the peculiar facts of this case regarding their dealings with Mr. Edwards and the Corporation’s legal counsel makes the absence of Page: 12 independence legal advice a relevant factor here in establishing a defence of economic duress. [34] At trial, the Corporation submitted that there was no demand or threat in that their representative, Mr. Edwards, suggested that the matter could have been reviewed by the Corporation’s directors. However, this suggestion rings hollow in the context of the pressure that the Corporation knew the Grandys were under from the existing lender threatening the commencement of enforcement action. The inference is irresistible that the Corporation sought to take advantage of the Grandy’s precarious financial predicament for their own benefit and thus obtain something to which they were otherwise not entitled. [35] The evidence established the exercise of pressure in the form of a “threat” or “demand” coupled with clear evidence that the Grandys had “no practical alternative” but to agree to vary the loan commitment and execute the guarantees. Taken together the Grandys did not voluntarily consent to the variation. The Grandys protested the Corporation’s demand at the time of the request. There was also no consideration for the variation. [36] The appellant submitted that “merely offering to lend money based on certain conditions cannot be deemed to be exerting pressure and the respondent was quite free not to sign or at the very least ask for a waiver, which he chose not to do”. However, at the closing, the Corporation’s executive officer’s indication that the Grandys, known to be in pressing need for funds, could seek a waiver from the board carried the important reservation that the possibility of a waiver was unlikely. These circumstances clearly constituted coercion vitiating consent by the lender to amend a loan commitment in the face of protest by the borrowers who had no practical alternative for financing because they did not have the luxury of delaying the matter in order to get independent advice or to seek an unlikely waiver from the Board. [37] The final issue relevant to the analysis here is that of consideration. There was no consideration for the variation to the loan commitment accepted by the Grandys. The principle that past consideration is no consideration for an additional promise potentially arises in this case. I note, however, that courts and commentators have criticized the principle. In Matchim v. BGI Atlantic Inc., 2010 NLCA 9 at paras. 80-82, Green CJNL noted that one of the cases which had disavowed a general application of the Page: 13 principle is Greater Fredericton Airport Authority. He noted that Robertson J.A. at para. 27 wrote: I am prepared to accept that there are valid policy reasons for refining the consideration doctrine to the extent that the law will recognize that a variation of an existing contract, unsupported by consideration, is enforceable if not procured under economic duress. [38] For the purposes of this case, it is not necessary to adopt this suggested variation of the doctrine of consideration. It is sufficient to state that the absence of consideration for the contractual variation constitutes another factor for reaching the conclusion that there was economic duress here and that the Corporation is accordingly not entitled to enforce the guarantee against Mr. Grandy. - The demand on the guarantee [39] The appellant submits that the trial judge erred by applying too rigid a criterion for the determination of whether a proper demand was made on the guarantees from the Grandys. The focus here is an assessment of the adequacy of the content of correspondence from the appellant and its legal counsel to Mr. Grandy in 1999. Paragraph 8 of the Guarantee reads: No law suit based on this Guarantee shall be instituted until demand for payment has been made. Demand for payment shall be deemed to have been effectually made upon the Guarantor if and when an envelope containing such demand addressed to the Guarantor at the address of the Guarantor last known to BPDC is mailed by prepaid ordinary mail, and if so mailed such demand shall be deemed to have been effectually made upon the Guarantor on the second business day following the day of the mailing. The learned trial judge properly relied on a decision of Goodridge J. (as he then was) in Bank of Nova Scotia v. Battiste (1979), 22 Nfld. & P.E.I.R. 192 (NLTD) which set out the criteria for a proper and enforceable demand under a guarantee, the demand being a condition precedent to a cause of action being actionable against a guarantor. At para. 32, Justice Goodridge listed the requirements as follows: One would normally expect to find in a notice in writing requiring payment a reference to the guarantee, a reference to the debt specifying the balance due and the interest accumulating thereafter thereon and a demand for payment. None of these features are present. Page: 14 [40] At para. 34, Goodridge J. also found that the guarantor is entitled to rigid adherence by the holder to the terms of the guarantee. He clearly stated, at para. 38, that no liability under a guarantee, being a collateral obligation, arises until a proper demand is made. This is a pre-requisite for a claim to become actionable. He further held that the existence of the demand must be expressly pleaded since it is part of the cause of action. [41] This position was applied by L.D. Barry J. (as he then was) in Avalon West Community Development Corp. v. Hogan (2005), 245 Nfld. & P.E.I.R. 264 (NLTD). The trial judge also cited with approval the decision of Stevenson J. (as he then was) in Royal Bank v. Ruben (1978), 24 N.B.R. (2d) 707 (Q.B.) to a similar effect. [42] Subsequent to the appeal hearing, Hoegg J. in Celtic Business Development Corporation v. Arsenault, 2010 NLTD(G) 121 held at para. 16 in a decision involving a claim for recovery of a deficiency on a personal guarantee that: “… It is well established in this jurisdiction that a guarantor is entitled to strict compliance with the terms of his guarantee…”. I concur with this view. In making this finding, Hoegg J. cited the reasons of Goodridge J. in Battiste as well as those of Hickman C.J. in Bank of Montreal v. Dodd (1981), 36 Nfld. & P.E.I.R. 416 at para. 14 and Orsborn J. (as he then was) in RoyNat Inc. v. Lester (1999), 129 Nfld. & P.E.I.R. 271 (NLTD) at para. 8. [43] At the appeal hearing, Mr. Grandy’s counsel referred to the decision of the Ontario Court of Appeal in Bank of Nova Scotia v. Williamson, 2009 ONCA 754. That court, dealing with an appeal from a summary judgment and relying upon Royal Bank v. Ruben, held at para. 20: “A demand under a demand guarantee must be clear and unequivocal”. [44] Here, the trial judge held that neither the 1999 letter from the executive director of the appellant nor the subsequent one from its counsel constituted a proper demand separately or in combination. He found that the letter from the appellant’s legal counsel dated June 11, 1999 was at best ambiguous and appeared to be referring to the outstanding corporate debt as much as it was to any deficiency owing under the guarantees. Even the evidence given at trial by legal counsel for the appellant on the loan transaction includes an acknowledgment that one could interpret the reference to “you” or “your company” in the letter as referring to the obligations of J. & J. Carpentry and not Mr. Grandy as guarantor. The Page: 15 learned trial judge found that there was no demand for immediate payment in full of the guarantee but merely a request that the account of J. & J. Carpentry be brought up to date. At para. 58 the trial judge held that: One cannot reasonably conclude that a final decision has in fact been taken to collect the full balance on the guarantee as it is expressed, at best, as an option for future determination. [45] The trial judge noted the submission of appellant’s counsel that Mr. Grandy had acknowledged on cross-examination his understanding that the letters from the appellant and the appellants’ counsel represented demands on the guarantee. However, the transcript of Mr. Grandy’s testimony on November 27, 2008 indicates that he believed the June 11, 1999 letter from the Corporation’s counsel was addressing the J. & J. Carpentry debt and did not say that the Corporation would be acting on its guarantee (see trial transcript, p. 154, lines 2 to 23). The trial judge found that “… his evidence did not vitiate the imprecision of these letters to effect a proper demand”. [46] The findings of the learned trial judge on this issue were based on non-compliance with the legal requirements for a proper and enforceable demand on Mr. Grandy’s personal guarantee. He did not err in his findings of facts or in law in reaching his conclusion that the purported demand on the guarantee was not enforceable. DISPOSITION [47] For the reasons set forth, the appeal is dismissed. Mr. Grandy shall be entitled to his costs in this Court and in the court below. _______________________ M.F. Harrington, J.A. I concur: ____________________ K.J. Mercer, J.A. I concur: _____________________ C.W. White, J.A.