Executive Summary: Key Legal and Evidentiary Issues

• Jaycap Financial Ltd. sought judgment against respondent Chris Lunney based on a joint and several personal guarantee dated April 12, 2024, arising from a loan agreement for $1,280,000 secured against vacant development lands in Victoria, BC.
   
• Mr. Lunney raised the defence of non est factum, arguing the Guarantee was fundamentally different from what he understood it to be, that he received no independent legal advice, and that a partner misrepresented the transaction to him.
   
• Central to the court's analysis was whether Mr. Lunney had raised a bona fide triable issue sufficient to warrant referral to the trial list or a hybrid process.
   
• The court found the defence of non est factum was bound to fail because Mr. Lunney acknowledged in his own evidence that he understood the document to be a personal guarantee — which is precisely what it was.
   
• No material misrepresentation was established, as there was no evidence that the loan's stated purpose as bridge financing was false or that the Guarantee was fundamentally different from what Mr. Lunney believed it to be.
   
• Despite Mr. Lunney's claim of unfamiliarity with loan documents, the court found him careless in signing the Guarantee, noting a notary's certificate confirming his awareness of its contents and his own net worth statement reflecting experience with mortgaged properties.

Facts of the case

Jaycap Financial Ltd. (the "Petitioner") commenced proceedings against several respondents, including Chris Lunney, in the context of commercial foreclosure proceedings over vacant development lands in Victoria, BC. The respondent Ferrell Living Inc. (the "Borrower") holds legal title to the property described as Lot B, Section 40, Victoria Land District, Plan VIP 402C (PID Number: 009-078-878). The property was pledged as security under a loan agreement dated February 7, 2024, for a principal amount of $1,280,000. On April 12, 2024, Mr. Lunney executed a joint and several personal guarantee in favour of Jaycap to secure the Borrower's obligations under that loan agreement. On February 17, 2026, the court granted an Order nisi against the balance of the respondents, while the relief sought against Mr. Lunney was adjourned generally. By consent on June 11, 2026, the hearing was further adjourned to June 18, 2026. The other directors of the Borrower and co-guarantors under the Guarantee, Messrs. Bradley and Grant, were noted to be subject to personal bankruptcy proceedings.

The guarantee and Mr. Lunney's defence

Jaycap sought declarations that the Guarantee dated April 12, 2024 was valid and enforceable, that Mr. Lunney was in default under it, and that all monies owing pursuant to the Guarantee were due and owing to the Petitioner. In his amended response to petition filed June 15, 2026, Mr. Lunney pleaded several matters: that he did not receive comprehensive legal advice explaining the nature, terms, or risks of the Guarantee before or at signing; that he had no direct communication with JayCap Financial Ltd. or with the legal counsel of Ferrell Living Inc. prior to signing; and that a partner of Ferrell Living Inc. had misrepresented the transaction as routine bridge financing carrying low or no risk. He further pleaded that he did not receive independent legal advice, notwithstanding that the documents were witnessed by a lawyer who witnessed the signatures of the partners of Ferrell Living Inc. At the hearing, Mr. Lunney relied solely on the defence of non est factum, abandoning other pleaded defences of unconscionability and a claim under the Interest Act, R.S.C. 1985, c. I-15. In his affidavit, Mr. Lunney deposed that he was being onboarded as a shareholder of TLA Group of Holdings Companies ("TLA"), the parent company of Ferrell Living Inc., and that Troy Grant advised him a personal guarantee would be required in connection with the JayCap loan. He also deposed that the transaction was presented to him as relatively routine bridge financing and that he was unfamiliar with loan documents or personal guarantees.

Court's reasoning and analysis

Justice Latimer applied the test for non est factum as set out in Marvco Colour Research Ltd v Harris, 1982 CanLII 63 (SCC), requiring that the document signed be fundamentally different in nature from what the party believed it to be, that the signing resulted from a misrepresentation, and that the party was not careless in doing so. The court found that Mr. Lunney's own evidence defeated the defence: he deposed that he believed he was signing a personal guarantee in connection with the JayCap loan — which is precisely what the Guarantee was. There was accordingly no evidence that the document was "fundamentally different in nature" from what he believed it to be. The court also found no material misrepresentation: there was no evidence that the loan's purpose was other than bridge financing, nor that the financing was not required to advance the development to its next stage. With respect to carelessness, the court noted that even accepting Mr. Lunney's evidence at face value, he would be found careless: he was unfamiliar with loan documents yet relied on Troy Grant to communicate legal advice to him, was not privy to legal advice received by TLA at the time, and failed to seek his own independent advice. The court further noted that appended to the Guarantee was a certificate of notary public sworn by lawyer Mikle L. Carter, certifying that Mr. Carter had satisfied himself by examination of Mr. Lunney that Mr. Lunney was aware of the contents of the Guarantee and understood it, and that the Certificate was signed on the same date by Mr. Lunney. The court found this demonstrated that Mr. Lunney had the opportunity to receive legal advice and would have been alerted that the situation called for it; his failure to do so was characterized as neglectful and careless. The court also noted that Mr. Lunney's own personal net worth statement showed him to be the managing partner at TLA for two years and to hold three other properties with mortgages secured against them — undermining his claim of unfamiliarity with loan documents. The court found there was no requirement in the circumstances for the lender to insist that Mr. Lunney obtain independent legal advice, citing Royal Bank of Canada v G.S. Continuous Gutters Inc., 2022 BCSC 366.

Ruling and overall outcome