Executive Summary: Key Legal and Evidentiary Issues

• The central issue was whether a Personal Guarantee ("PG") signed by Jiyue Zhao on January 25, 2018 was unconscionable and therefore unenforceable.
• Unconscionability under the Uber Technologies Inc. v. Heller framework requires proof of both an inequality of bargaining power and a resulting improvident bargain.
• Zhao acknowledged he understood the PG's terms, did not seek legal advice, and signed without objection — undermining his claim of vulnerability.
• No inequality of bargaining power was established; Zhao was a sophisticated commercial actor and the PG was, in part, economically advantageous to him.
• Evidence of post-signing conduct — including misrepresentation of the BMW X5's value and repeated broken payment promises — weighed against Zhao's characterization as a vulnerable party.
• Costs remain to be determined, with written submissions due from both parties by June 2026.

Facts of the case

The plaintiffs, 2848895 Ontario Inc. and 2848899 Ontario Inc. (collectively operating as "Techlantic"), are Canadian corporations that took an assignment of the claim on August 30, 2021. The defendant, Modellista Auto Accessories Inc. ("Modellista"), is an Ontario corporation that exported automobiles to China. Its principal, Jiyue Zhao — a professional engineer residing in Markham, Ontario — is the second defendant. Modellista engaged Techlantic to facilitate the financing, shipping, and storage of luxury vehicles sourced from Canada until their release at Chinese ports of entry. Over the course of their relationship, Modellista sold more than 800 vehicles using Techlantic's services.

Under a May 2017 Agreement, Modellista was required to pay service fees — covering shipping, handling, incidentals, and financing — within 40 days of the date of order. Overdue amounts attracted interest at 1.5% per month, equivalent to 18% per annum. Modellista soon fell into a pattern of non-payment. By mid-2017, payments were taking 60 days, and by late 2017 the outstanding balance had grown to approximately $240,000. Techlantic generally accommodated the delays but began pressing for resolution in the fall of 2017.

During the week of January 22, 2018, matters came to a head. Zhao was anxious to have two vehicles held by shipping agent C-Motion released by January 26, 2018. After a series of communications — including unfulfilled promises of $70,000 payments and an unresolved TD Bank mortgage application for $260,000 — Zhao himself proposed signing a personal guarantee in exchange for the vehicles' release. On January 25, 2018, Tom van Essen of Techlantic self-drafted a Personal Guarantee using online standardized forms and sent it to Zhao at 4:32 pm. Zhao returned the signed PG, along with his driver's licence and passport, at 6:01 pm. He requested no changes and did not consult the other director of Modellista or seek independent legal advice.

Policy terms and contractual clauses at issue

The PG provided, among other things, that: (a) Zhao personally guaranteed performance of Modellista's obligations up to $240,000; (b) principal and interest on the debt would accelerate on default; (c) Zhao waived defences, counterclaims, and offsets relating to guaranteeing Modellista's debt; (d) Techlantic was under no obligation to collect or protect its security against Modellista; and (e) Techlantic could proceed in the first instance against Zhao. A letter attached to the PG confirmed the outstanding debt as of January 25, 2018 at $240,830.13, an amount not in dispute. Zhao agreed at trial that he understood the terms of the PG and was aware that if Modellista failed to pay, he would be personally responsible for the outstanding amount.

Reasoning and analysis

Justice McGee applied the two-part unconscionability framework established by the Supreme Court of Canada in Uber Technologies Inc. v. Heller, 2020 SCC 16, which requires proof of (a) an inequality of bargaining power and (b) a resulting improvident bargain. The court also drew on subsequent Ontario decisions, including Sanders v. Canada's Choice Investments Inc., 2023 ONSC 195; IMAX Corporation v. Guzzo et al., 2026 ONSC 621; ClearFlow Commercial Finance Corp. v. Trigger Wholesale Inc., 2021 ONSC 3421; and Business Development Bank of Canada v. ROC Ice Cream Inc., 2022 ONSC 1945, all of which affirmed that the burden of proving unconscionability rests on the party raising it and is a high threshold to clear.

The court rejected Zhao's argument on all three analytical fronts. First, the condition of holding vehicles until payment was not a departure from the parties' established operating terms — Techlantic had always been entitled to withhold release until its fees were paid, and its prior flexibility did not alter that baseline. Second, the court found no inequality of bargaining power. Techlantic was a small operation, and Modellista was its largest customer, accounting for approximately 25% of its business by 2018. Techlantic's efforts to accommodate Zhao were consistent with a desire to preserve a key commercial relationship, not exploitation. Notably, it was Zhao — not Techlantic — who first proposed signing a personal guarantee. Third, the PG was not an improvident bargain. The court found it was economically advantageous to Zhao: it allowed him to continue operating on Techlantic's credit, avoid out-of-pocket payments, and defer financial obligations, while capping his personal liability at $240,000. The court also noted Zhao's post-signing conduct, including his misrepresentation of the BMW X5 as being worth $80,000 when its actual value was approximately $20,000 and it had already been sold to a Canadian buyer, as further evidence that he was not a vulnerable party.

Ruling and overall outcome

Justice McGee found that Zhao failed to meet the onus of establishing that the PG was unconscionable. Accordingly, paragraph 2 of the Default Judgment dated October 2, 2019 was restored, requiring Zhao to personally pay $243,313.97, with pre-judgment and post-judgment interest at the rate of 18% per annum. The plaintiffs, Techlantic, were the successful parties. The question of costs remains pending, with the plaintiffs' written submissions due no later than June 10, 2026 and Zhao's submissions due no later than June 24, 2026, if the matter cannot be resolved by agreement.