Executive Summary: Key Legal and Evidentiary Issues

• Appellants sought release from personal guarantees and a guarantor mortgage on their residence following the sale of secured properties to a related entity of the creditor.

• Waiver provisions in asset purchase agreements did not extend to Enright Monterra, the entity holding rights under the appellants' guarantees, as it was not a party to those agreements.

• No novation occurred because the creditor (Enright Monterra) never agreed to release the original debtors or accept the new purchaser as solely liable for the debt.

• Equitable arguments regarding self-dealing and change of risk failed, as the appellants had expressly agreed their liability would continue regardless of changes in parties liable for the debt.

• Indemnity provisions in the purchase agreements would not release appellants from their obligations but would only require reimbursement if payments were made.

• Contra proferentem doctrine was inapplicable as no unresolvable ambiguity existed in the agreements determinative to the appeal's outcome.

Background and property transactions

In April 2020, Lukus Development Inc, a corporation owned by appellant Dominic Urban, purchased four undeveloped bareland condominium units in the MonTerra development in Rocky View County from Enright Monterra GP Ltd, as general partner of Enright Monterra Limited Partnership. The units were subsequently transferred to another corporation owned by Dominic Urban, 2101705 Alberta Ltd, with the intention of building homes on the units and selling them. Enright Monterra retained a vendor's lien for part of the purchase price.

Financing arrangements and personal guarantees

In October 2021, the corporations obtained financing from Jovica Property Management Ltd and 373624 Alberta Ltd, granting various security including a mortgage on three of the four bareland units (units 86, 154 and 166). Dominic Urban and Kelsi Urban personally guaranteed this debt and mortgaged their residence as security for their guarantees. Enright Monterra held an option to purchase Jovica's interest in the debt and related security, including the appellants' guarantees and guarantor mortgage.

Default and receivership

The corporations defaulted on the Jovica debt and faced claims by end purchasers alleging that 2101705 or Lukus had misapplied the end purchasers' deposits and failed to meet building deadlines. Enright Monterra exercised its option to purchase the Jovica debt and took an assignment of Jovica's interest in the related security. With 2101705's and Lukus's consent, Enright Monterra obtained a receivership order, and Riley Farber Inc was appointed as receiver of the four units on March 31, 2023. In November 2023, in the context of the receivership, the Court of King's Bench approved the sale of two of the units (units 86 and 166) to Enright West Ltd, an entity related to Enright Monterra; Enright West and Enright Monterra GP Ltd are both wholly owned by Enright Capital Ltd and they have the same directors.

The appellants' application and grounds of appeal

On January 2, 2024, the appellants applied for an order declaring that Enright West and Enright Monterra have no interest in the title to the appellants' residence and for an order directing the Registrar of Land Titles to remove the guarantor mortgage from title to the residence. They relied in a variety of ways on the sale of units 86 and 166 to Enright West to argue that they are no longer bound by the personal guarantees or the associated guarantor mortgage. The chambers judge dismissed the application, and the appellants raised multiple grounds of appeal including alleged errors regarding waiver, novation, equities, indemnity, and failure to apply the contra proferentem doctrine.

Analysis of waiver and corporate separateness

The Court of Appeal found that the waiver provision in the asset purchase agreements did not benefit the appellants. Even if the appellants qualified as "Vendor Entities" under the agreements, Enright West was the only Enright entity that is a party to the asset purchase and sale agreements. The appellants sought relief from their obligations to Enright Monterra. It was Enright Monterra, not Enright West, that took an assignment of Jovica's rights under the appellants' personal guarantees and the associated guarantor mortgage. The Court emphasized that Enright Monterra and Enright West are related entities but that, on its own, does not pierce the corporate veil and mean that a waiver by Enright West amounts to a waiver by Enright Monterra or to a waiver of rights held by Enright Monterra.

Novation requirements not satisfied

Applying the three-part test from National Trust Co v Mead, the Court determined that no novation occurred. Enright Monterra, the creditor under the Jovica debt and the appellants' personal guarantees, is not a signatory to the asset purchase and sale agreements. The record did not include any other documents suggesting that Enright Monterra agreed to release 2101705, Lukus or the appellants from their liability with respect to the Jovica debt and treat Enright West as being solely liable for the Jovica debt. The reference to "novation" in the definition of Conveyance Documents may well be precedent or generic language.

Equitable arguments and change of risk

The appellants argued it was inequitable for them to remain liable under their personal guarantees and the guarantor mortgage once Enright West purchased units 86 and 166, because of the relationship between Enright West and Enright Monterra. The Court found no reviewable error in the chambers judge's assessment that the appellants had failed to demonstrate a material change in their risk. The chambers judge's conclusion is further supported by the fact that 2101705 was in a default position to Jovica before Kelsi Urban granted her personal guarantee and before the appellants granted the guarantor mortgage at all. The chambers judge also found the appellants to have expressly agreed that their liability as guarantors would continue regardless of another person becoming or ceasing to be liable for the Jovica debt and that their obligations, as guarantors, could be altered.

Indemnity and costs

Regarding indemnity, the Court agreed with the chambers judge that even if the appellants had the benefit of the indemnity provision in the agreements of purchase and sale for units 86 and 166 and even if it were interpreted to cover amounts paid by the appellants under their personal guarantees, the indemnity would not entitle the appellants to the relief they sought. At best, they would require Enright West to reimburse the appellants if the appellants made payments on the Jovica debt, or to pay a judgment for damages rendered against the appellants on a matter contemplated by the indemnity clause. The costs award of reasonable solicitor and client costs was upheld; the chambers judge's primary reason for awarding solicitor and client costs was because Enright Monterra was entitled to them pursuant to the guarantor mortgage.

Ruling and outcome

The Court of Appeal of Alberta, comprising The Honourable Justice Michelle Crighton, The Honourable Justice April Grosse, and The Honourable Justice Joshua B. Hawkes, dismissed the appeal. The memorandum of judgment was filed at Calgary, Alberta on the 5th day of February, 2026. The respondents, Enright West Ltd and Enright Monterra GP Ltd (as general partner for and on behalf of Enright Monterra Limited Partnership), were successful in maintaining the chambers judge's decision that the appellants remain bound by their personal guarantees and the guarantor mortgage on their residence. No specific monetary amount was determined in this appeal, as the proceedings concerned declaratory relief rather than quantified damages.