Executive Summary: Key Legal and Evidentiary Issues

• TD Bank sought summary judgment to enforce two business credit facilities against a corporate director personally.

• The defendant raised the defence of non est factum, claiming he did not understand he was signing a personal guarantee.

• Evidence showed the defendant had limited English proficiency and did not receive independent legal advice.

• The court found key loan documents were ambiguous about whether the defendant signed in a personal or corporate capacity.

• TD presented no direct evidence from its representatives to refute the defendant’s account.

• The court ruled that the factual issues and credibility assessments required a trial.

Background and facts

In The Toronto-Dominion Bank v. 6300847 Canada Inc. and Esmaeil Safaverdi, 2025 ONSC 3441, the plaintiff, TD Bank, brought a motion for summary judgment against Esmaeil Safaverdi, the sole shareholder of 6300847 Canada Inc. The bank sought approximately $58,000, representing unpaid amounts on two credit facilities issued to the company: a $40,000 line of credit and a $10,000 Visa business credit card. The corporate defendant did not defend the action, leaving only Mr. Safaverdi’s liability in issue.

TD claimed that Mr. Safaverdi had signed personal guarantees for both credit facilities. Mr. Safaverdi disputed this, stating that he signed the documents only on behalf of the corporation and never understood that he was personally guaranteeing the debts. He advanced the defence of non est factum, asserting that, due to misrepresentation and his limited understanding of English, he did not comprehend the nature of what he was signing.

The summary judgment motion

The court considered whether the matter could be fairly decided without a trial under Rule 20 of the Rules of Civil Procedure. Justice Conlan emphasized that the moving party, TD, bore the burden of demonstrating that no genuine issue required a trial. The judge reviewed the principles of summary judgment and non est factum, citing previous case law that outlined the criteria for when this rare defence may apply—namely, when a person signs a document without understanding its nature or character, without being careless, and as a result of a misrepresentation.

In this case, the court found that there was unchallenged affidavit evidence from Mr. Safaverdi, who stated he could not read English fluently, did not receive legal advice, and believed he was signing solely in his role as president of the corporation. His affidavit included an interpreter’s declaration, reinforcing concerns about language comprehension. Additionally, TD provided no direct evidence from any of its representatives to counter or clarify how the documents were explained to Mr. Safaverdi.

The court also found that the loan documents were ambiguous. The line of credit agreement named only the corporation as the customer and listed Mr. Safaverdi as signing in his capacity as president. The Visa agreement contained language that could support either personal or corporate liability, depending on interpretation. Moreover, a separate guarantee document—signed years later—was general in nature and did not specify that it applied to the two credit facilities at issue.

Court's decision and outcome

Justice Conlan concluded that the evidence presented significant uncertainty as to whether Mr. Safaverdi knowingly agreed to personally guarantee the debts. The ambiguities in the documents, combined with the lack of opposing evidence from TD and the credibility issues raised by Mr. Safaverdi’s account, made it impossible to determine the matter fairly on a summary judgment motion. A trial was necessary to resolve the factual disputes and assess the reliability of the testimony.

The motion for summary judgment was dismissed. While the issue of costs was left open for submissions, the court noted that Mr. Safaverdi was presumptively entitled to some costs, given the result. The parties were invited to submit two-page written arguments on the issue.

This case highlights the importance of clarity in guarantee documentation and underscores the limitations of summary judgment where language barriers, alleged misrepresentations, and conflicting interpretations of key documents are at play.