Background:
- Credit Agreement: CIBC advanced $350,000 to Zaynluke Restaurant Ltd. under a Small Business Financing Loan, secured by guarantees from Seif and Sam Elgebeily.
- Default: Zaynluke defaulted after Mezza Franchising Limited terminated its franchise agreement, causing the restaurant to cease operations. CIBC demanded full repayment, which the defendants failed to pay.
- Defence: The defendants claimed they attempted to make regular payments, which CIBC refused, and argued CIBC breached its duty of good faith by trying to sell their assets below market value.
Legal Issues:
- Summary Judgment on Pleadings:
- Test: The court must strike the defense if it is clear that it discloses no valid defense.
- Decision: The defense was found unsustainable as the defendants admitted to defaulting and failing to repay the loan.
- Summary Judgment on Evidence:
- Test: Summary judgment issues if there is no genuine issue of material fact or law.
- Decision: The court found no material facts in dispute, confirming the defendants’ breach of the credit agreement and guarantees.
- New Claim: The defendants’ late argument that CIBC breached its duty of good faith by refusing regular payments was dismissed as it wasn’t pleaded earlier.
- Request for Discovery: Denied as the defendants failed to show relevance of potential communications between CIBC and Mezza.
Outcome:
- Ruling: Summary judgment granted in favor of CIBC, dismissing the defense.
- Costs: CIBC entitled to costs, but the exact amount was not determined in the decision.
Final Order: Prepared by CIBC’s counsel as directed by the court.