Executive Summary: Key Legal and Evidentiary Issues

• Dispute centered on enforcement of a personal guarantee provided by a company director for an $80 million commercial loan.

• Defendant claimed the guarantee was unenforceable due to creditor misconduct and impairment of security.

• Court considered whether complex insolvency proceedings precluded summary judgment.

• Defendant's alleged defences were found to be unsupported by the factual record and contradicted by court-approved reports.

• Prior court findings and a Supreme Court decision confirmed the defendant's role in corporate fraud.

• Summary judgment was granted based on clear evidence, dismissing all substantive defences.

Facts of the case

John Aquino, a former director of Bondfield Construction Company Limited, provided an unlimited personal guarantee to Bridging Finance Inc. as security for an $80 million credit facility granted to Bondfield in July 2017. The loan was made up of two demand loans—a $60 million non-revolving facility and a $20 million revolving loan. In October 2018, Bondfield defaulted, triggering demands for repayment from both the company and Aquino. Bondfield soon entered insolvency proceedings, and a receiver (PwC) was appointed over Bridging’s assets. In 2022, the right to enforce Aquino’s guarantee was assigned to Zurich Insurance Company Ltd., which had provided surety bonds on some of Bondfield’s projects.

Zurich brought a motion for summary judgment against Aquino to enforce the guarantee. Aquino opposed the motion, claiming the matter was too complex for summary determination due to ongoing insolvency litigation and alleged missing documents. He also argued that changes in creditor behaviour and restructuring agreements altered or impaired his liability, and therefore the guarantee should be reduced or discharged.

Court’s legal analysis and outcome

The court first considered whether the motion for summary judgment was appropriate under Rule 20 of the Rules of Civil Procedure. Although the record was lengthy and the corporate insolvency context complex, the court found that the legal and factual issues relevant to the enforceability of the guarantee were straightforward and separable from the broader litigation. The judge ruled that the materials before the court allowed for a fair adjudication of the dispute without the need for a trial.

Aquino raised multiple defences to the enforcement of the guarantee, including allegations that creditors had varied their rights and impaired security to his detriment, and that he was improperly excluded from restructuring decisions. He also claimed that unproduced sealed documents might support his case. The court rejected all of these arguments. It noted that Aquino had made no attempt to access the sealed documents through court channels despite knowing of their existence for over a year. The court further held that the documents were not essential to deciding the enforceability of the guarantee.

Turning to the substance of the guarantee, the court emphasized that it was broad and unequivocal. Aquino had agreed that the creditor need not exhaust recourse against Bondfield or other guarantors, and that changes in other security or arrangements would not affect his liability. The court found that Aquino had voluntarily assumed this risk with full knowledge and legal advice. Moreover, the record demonstrated that Aquino had been terminated from Bondfield for orchestrating an $80 million fraud—a fact confirmed in evidence, monitor reports, and a Supreme Court of Canada ruling that detailed his misconduct, false invoicing, and concealment of liabilities.

Aquino’s claim that the security was impaired or materially altered was found to be speculative and unsupported. The court found no bad faith or misconduct on the part of the creditors or monitors, all of whose actions had been court-approved. The judge concluded that none of Aquino’s defences raised a genuine issue requiring a trial.

Disposition

The court granted summary judgment in favor of Zurich Insurance Company Ltd. Judgment was issued against John Aquino in the amount of $40,848,467.60 in principal, plus $27,809,670.78 in pre-judgment interest, with additional daily interest accruing until the date of decision. Post-judgment interest would continue at the contracted rate. The issue of costs was left to be resolved by the parties or through brief written submissions.