GE Commercial v. Francks

2003BCCA0546 COURT OF APPEAL FOR BRITISH COLUMBIA Citation: GE Commercial v. Francks, 2003 BCCA 546 Date: 20031009 Docket: CA030435 Between: GE Commercial Distribution Finance Canada Inc. Appellant (Plaintiff) And Janine Francks Respondent (Defendant) Before: The Honourable Mr. Justice Lambert The Honourable Madam Justice Huddart The Honourable Mr. Justice Mackenzie Oral Reasons for Judgment P. Roberts Counsel for the Appellant D. Nugent Counsel for the Respondent Place and Date: Vancouver, British Columbia October 9, 2003 [1] LAMBERT, J.A.: In 1994 Daytona Motorcycles Limited entered into a financing agreement with ITT Commercial Finance. In May 1995, Daytona consented in writing to the assignment of the obligations of Daytona from ITT Commercial to Deutsche Financial Services Canada Corporation. [2] In January 2000, Janine Francks, the defendant, executed a form of guarantee in favour of Deutsche Financial Services. The guarantee was a standard form document prepared by Deutsche Finance. The name of the debtor in the form of guarantee was not filled in. Thereafter the debtor is referred to as the "Dealer" throughout the document. On the face of the document there is no identification of the dealer that is the debtor. [3] There was a clause in the form of guarantee. It reads in this way: This document contains the full agreement of the parties concerning the guarantee of Dealer's liabilities and can be varied only by a document signed by all the parties hereto. No statement, representation, agreement or promise on your part or of any officer, employee or agent acting or purporting to act on your behalf shall, unless specifically included in writing of this Guarantee, be or be deemed to form part hereof. Without limiting the generality of the foregoing, the undersigned, and each of them hereby acknowledge and agree and with you that you shall not be bound by any representation, statutory agreement or promise at any time made to or for the undersigned or any them by or behalf of the Dealer [4] Apparently, at the same time as she signed this document, Janine Francks also acknowledged by her signature a document headed "Certificate of Independent Legal Advice". It was directed to Deutsche Financial Services. It reads in this way: This will certify that the undersigned has advised Janine Francks, common-law spouse of Fenton Aubrey, as to the propriety and significance of executing Deutsche Financial Services, a division of Deutsche Bank Canada, form guarantee, as surety for the obligations of Daytona Motorcylces Ltd. Janine Francks has been advised independently of Fenton Aubrey; all relevant circumstances and information in connection with said guarantee have been brought to the spouse's attention as were the possible consequences thereof. The spouse has indicated that she fully understands the nature and effect to the guarantee and she voluntarily freely wishes to give it. [5] This document is signed by a barrister and solicitor. At the bottom Janine Francks says: I, Janine Francks, hereby acknowledge having read this certificate, and verify that it is proper and correct. She then added her signature. [6] This action was taken by GE Commercial Distribution Canada against Janine Francks on the guarantee. The defence was that the principal debtor's name was not on the guarantee and that the guarantee form was not in itself sufficient to operate as a guarantee with the defect that it had. [7] The plaintiff applied for a summary trial under Rule 18A. The defendant filed an affidavit. The only relevant provision of which reads in this way: The documents attached as Exhibit "C" to the Affidavit of Murray Pollard sworn July 29, 2002 and filed in these proceedings were not prepared by me. They were presented to me for signing. It is my understanding that these documents are standard forms prepared by the Plaintiff. [8] Those documents were not only the form of the Guarantee but also the Certificate of Independent Legal Advice. [9] The summary trial application under Rule 18A came before Mr. Justice Goepel. He referred to the facts and he referred also to ss. 59(6) and 59(7) of the Law and Equity Act. He referred to these three cases: C.I.B.C. v. Walman, [1986] B.C.J. No. 763 (S.C.); C.C. Bottling Co. Consolidated Ltd. v. Footbridge Trading Ltd., [1990] B.C.J. No. 1978 (C.A.); and Bank of British Columbia v. Garren, [1980] B.C.J. No. 379 (C.A.). [10] Mr. Justice Goepel distinguished each of the three cases, all of which dealt with cases where the name of the debtor had not been completed in the form of guarantee. The circumstances of each of them are different from each other and different from this case. Mr. Justice Goepel considered that the differences made those cases inapplicable to this case when properly understood. Mr. Justice Goepel went on and concluded his reasons in this way: [11] In this case, the plaintiff relies on the certificate of independent legal advice to supply the missing name. Unlike the situation in C.C. Bottling, the certificate does not form part of the guarantee document. Indeed, the guarantee, on its face, sets out that the document contains the full agreement of the parties and can only be varied by a document signed by all the parties thereto. [12] The plaintiff has chosen to proceed to trial under Rule 18A. It has chosen the evidence which has been put forward. It has not pled or sought rectification. In the result, on the evidence before me, I conclude that the plaintiff has failed to prove its claim. [13] The action is dismissed with costs. [11] Counsel for the appellant said in argument that Mr. Justice Goepel had not distinguished the three cases properly and that properly understood they governed this case. Counsel for the appellant also referred to the judgment of Mr. Justice Hall in SPX Canada Inc. v. Watts, [1995] B.C.J. No. 83 (S.C.), particularly to paras. 16, 17, and 18, in which Mr. Justice Hall discusses the history of the guarantee provisions through the Statute of Frauds and the Law and Equity Act in their historical context. He expresses his conclusion that the technical rigidity of the old cases is no longer required and that the law should be giving effect where possible to the intention of the parties if that can be done with a clear understanding of what that intention was. [12] In cases of this type, we must start off with the form of guarantee itself. If the form of guarantee is full, complete and correct and is put forward as the basis of the claim then that will, no doubt, end the matter. But if we have a form of guarantee that is not complete then new questions are raised. There arises the issue of whether the case is an appropriate one for rectification of the document should it be certain that it contains a mistake. There also arises the question of whether, within the four corners of the document, the intention of the parties can be derived so that a correct construction can be put on the document and the document so construed applied. [13] Under the more recent concepts dealing with the rigidity of the old guarantee law, it is permissible to seek the intention of the parties by references to that intention outside the document where the interests of justice require it. If authority were needed for that proposition it may be found in Gallen v. Butterly (All State Grain Company), (1984) 53 B.C.L.R. 38. [14] In circumstances where the clear intention of the parties would be defeated then evidence may be presented which will reveal the intention in accordance with the concepts which must underlie s. 59(7) of the Law and Equity Act. [15] Mr. Justice Goepel did not think that the Certificate of Independent Legal Advice was so intimately related to the form of Guarantee as part of the Guarantee transaction itself that it could be relied upon to interpret the guarantee, particularly in the face of the provisions in the form of guarantee that said it contained the whole agreement of the parties. [16] As I read the reasons of Mr. Justice Goepel in the paragraphs that I have quoted he concludes in the end that the evidence in this case was not sufficiently reliable to permit the conclusion to be reached that both parties intended that the guarantee should be a guarantee of the indebtedness from time to time of Daytona Motorcycles Limited. [17] That conclusion is a conclusion based on a weighing of the evidence. This Court could only interfere with that conclusion if it is clearly and palpably wrong. The intention of the parties can surely not be limited to this single document, and though affidavit evidence can be led on a Rule 18A application, it is justifiable for Mr. Justice Goepel to say that on such an application and on the evidence before him he did not think that the mutual intention had been proved. [18] In my opinion, this Court cannot interfere with that conclusion based on a weighing of the evidence. For those reasons I would dismiss the appeal. [19] HUDDART, J.A.: I agree. [20] MACKENZIE, J.A.: I agree. [21] LAMBERT, J.A.: The appeal is dismissed. Costs will follow the event. "The Honourable Mr. Justice Lambert"