Executive Summary: Key Legal and Evidentiary Issues

• Enforcement of a written guarantee securing a $9 million commercial loan following borrowers’ default and non-payment by guarantors
• Appropriateness of summary judgment where defendants filed no evidence, did not attend the motion and raised only a pleading-based defence
• Application of Ontario Rule 20 summary judgment principles, including the test for a “genuine issue requiring a trial” and the court’s enhanced fact-finding powers
• Interpretation of the guarantee and commitment letter to confirm the guarantors’ joint obligations for principal, interest, and enforcement costs upon demand
• Rejection of any defence suggesting the lender was required to pursue primary borrowers before enforcing the guarantee against guarantors
• Quantification of the plaintiff’s entitlement, including principal, contractually specified pre- and post-judgment interest rates, and substantial indemnity costs

Background and facts of the case

Empirical Capital Corp. advanced a substantial commercial loan of $9 million to a group of borrowers: 2749 Lakeshore Inc., 2749 Lakeshore LP, 2765 Lakeshore GP Inc., and 2765 Lakeshore LP. The loan was documented under a commitment letter that set out the borrowers’ repayment obligations, including principal, interest, and enforcement-related costs. To secure this loan, several related entities and individuals – Trulife Developments Inc., Landeal Group Inc., Duc-Vi Chau (also known as Duv-Vi David Chau or David Chau), and Jing Tang – executed a written guarantee dated October 31, 2023. Under this guarantee, they undertook to guarantee the borrowers’ obligations under the commitment letter, expressly including payment of principal, interest and any costs incurred in enforcing the guarantee. In due course, the borrowers defaulted on the loan. The plaintiff, Empirical Capital Corp., made a formal demand on the guarantor defendants for payment in accordance with the guarantee. Notwithstanding this demand and the fact that the loan ultimately matured, the defendants failed to make any payment to the plaintiff. Faced with an unremedied default and a written guarantee that had been triggered by demand, the plaintiff commenced proceedings and then brought a motion for summary judgment to enforce the guarantee against all defendants.

Summary judgment framework and procedural posture

The motion came before the Ontario Superior Court of Justice as a summary judgment motion in a guarantee claim. The governing framework was Rule 20 of the Rules of Civil Procedure, as interpreted by the Supreme Court of Canada in Hryniak v. Mauldin. The judge recited the two-step analysis: first, to determine on the written record whether there is a “genuine issue requiring a trial,” and, if so, whether the court’s enhanced powers under Rules 20.04(2.1) and 20.04(2.2) (including weighing evidence, evaluating credibility, drawing inferences, and ordering oral evidence) could nevertheless resolve the dispute fairly and proportionately at the motion stage. The plaintiff filed a motion record establishing the loan, the guarantee, the default and the outstanding amounts claimed. The defendants, despite being timetabled and properly served with the motion materials and hearing details, filed no responding affidavits or evidence and did not attend the hearing. Court staff contacted their counsel of record, who confirmed that the defendants would not be appearing. As a result, the evidentiary record before the court was effectively uncontested and consisted solely of the plaintiff’s materials.

Legal analysis: guarantee obligations and absence of a genuine issue

On the basis of the uncontested record, the court was able to make all necessary factual findings without resorting to the enhanced fact-finding tools under Rule 20.04(2.1). The judge found that the defendants gave a guarantee dated October 31, 2023 in favour of the plaintiff, securing the $9 million loan extended to the named borrowers. Through this guarantee, the defendants promised to answer for the borrowers’ obligations under the commitment letter, including repayment of principal, interest, and any enforcement costs. It was undisputed on the record that the loan was in default, that the plaintiff had demanded payment from the guarantors pursuant to the guarantee, and that no payment had been made after demand and maturity. Applying the law of guarantees, the court held that, upon default by the borrowers and demand by the plaintiff, the defendants’ contractual obligation to pay under the guarantee was triggered. The obligation covered the principal amount loaned, the interest stipulated under the lending documents, and the costs of enforcing the guarantee. The judge concluded that the defendants were “subject to a clear contractual obligation” in these terms and that there was no genuine issue requiring a trial on liability or entitlement. One point raised in the pleadings – that the plaintiff ought to have pursued the borrowers rather than the guarantors – was expressly rejected as inconsistent with the terms of the guarantee and therefore incapable of raising a genuine triable issue.

Policy terms and interest provisions under the guarantee

Although this was not an insurance policy dispute, the court addressed key contractual provisions governing monetary consequences under the guarantee and related loan documents. The guarantee incorporated the borrowers’ obligations under the commitment letter and thus imported those terms for principal, interest, and enforcement costs. In the final order, the court specified detailed interest provisions reflecting the contractual allocation of risk. It awarded prejudgment interest on the principal sum of $9,126,162.71 from April 11, 2025 to May 1, 2025 at the rate equal to the greater of 12.25% per annum and the Royal Bank of Canada Prime Rate plus 5.05% per annum. It further ordered prejudgment interest on the same principal amount from May 2, 2025 to the date of judgment, and post-judgment interest thereafter, at a rate equal to the greater of 18.00% per annum and the Royal Bank of Canada Prime Rate plus 10.80% per annum. In addition, the court enforced the guarantee’s provisions regarding enforcement costs by ordering the defendants to pay the plaintiff’s costs of enforcing the guarantee on a substantial indemnity basis, fixed at $34,000 inclusive of fees, disbursements and HST. These provisions reflect a heavily creditor-protective interest and cost structure, which the court accepted as a matter of contractual freedom and enforcement of written commercial terms.

Outcome and final orders

Having found that the defendants provided a binding guarantee, that the borrowers defaulted, that proper demand was made and ignored, and that the defendants offered no evidence or viable defence, the court held that there was no genuine issue requiring a trial. It also concluded that summary judgment was the more proportionate, timely and cost-effective route than a full trial, particularly given the defendants’ non-participation. The court therefore granted summary judgment in favour of the plaintiff, Empirical Capital Corp., ordering the defendants to pay $9,126,162.71 as principal, plus prejudgment and post-judgment interest at the specified variable contractual rates and $34,000 in substantial indemnity costs. While the exact final dollar total cannot be determined from the decision alone because it depends on the applicable Royal Bank of Canada prime rate over time and the running of interest, the judgment clearly identifies Empirical Capital Corp. as the successful party and secures for it a monetary award consisting of at least $9,160,162.71 in principal and fixed costs, with additional amounts accruing through contractual interest.