Executive Summary: Key Legal and Evidentiary Issues

• Whether a facially compliant certificate under s 5 of the Guarantees Acknowledgment Act binds a purported guarantor whose signature was forged on both the guarantee and the certificate.
   
• Standard of review depended on whether the issue was pure statutory interpretation or a question of mixed fact and law involving factual, public policy and equitable considerations.
   
• Uncontroverted evidence, including the respondent's affidavit (never cross-examined) and a de bene esse questioning transcript of the alleged fraudster, established that an impersonator appeared before the lawyer who issued the certificate.
   
• Common law treats a forged document as a nullity, and the chambers judge's finding that the forged guarantee was unenforceable against the respondent was upheld.
   
• Equitable estoppel arguments relying on Marvco, Welcome Investments and Distribulite, which would place the loss on the party who enabled the wrongdoer, were found not to apply on these facts.
   
• Summary dismissal of the creditor's claim was affirmed because there was no genuine issue requiring trial.
   

Facts of the case

Diamond-Dun Properties Ltd. [Note: the style of cause in the citation reads "Diamond Dun-Properties Ltd," while the party listing reads "Diamond-Dun Properties Ltd." and para 16 reads "DiamondDun"; the source is inconsistent] agreed to lease a commercial property to 2138809 Alberta Ltd. Directors Ming Xu and Anton Wootliff executed the lease agreement, which required Xu, Wootliff and Yinan Zhao to guarantee the landlord full indemnity for any loss arising from the company's failure to pay rent or meet its obligations. The landlord received a standard form indemnity agreement dated January 11, 2019, which appeared to bear all three signatures. Xu swore an affidavit of execution attesting that he watched Zhao sign in the presence of a lawyer, and the lawyer prepared a Form 1 certificate (Alta Reg 66/2003) under s 4 of the Act. Zhao's name appeared under the "Statement of Indemnifier" portion of that certificate. When the lease was amended on February 22, 2022, Xu and Zhao signed as owners, and all three men signed as indemnifiers.

After the landlord sued, alleging the company breached the lease and each indemnifier had accepted liability, it applied for summary judgment against Zhao, relying on the certificate as conclusive proof of compliance with the Act. Zhao cross-applied for summary dismissal. In his affidavit, he described himself as a passive investor who sold his shares to Xu in August 2019, denied any involvement with the lease or the amended lease, and denied signing the indemnity agreement or the certificate. He said he was not in Edmonton on the day of signing, though he knew a meeting had been scheduled, and that he handed Xu his driver's licence after Xu said he would "take care of everything." Zhao stated he first learned of the indemnity agreement in April 2023, when the action began. In July 2023, according to Zhao, Xu told him he had given the licence to Shuo Liu, whom he had asked to impersonate Zhao; Liu attended the meeting with the lawyer and forged Zhao's signature on the indemnity agreement and certificate. Xu also admitted forging Zhao's signature on the amended lease and other credit applications.

The landlord did not cross-examine Zhao on his affidavit. Because of concerns about Xu's health, Zhao's lawyer obtained an order for a de bene esse questioning of Xu, held in April 2024, which the landlord's lawyer attended without otherwise participating. On September 17, 2024, the applications judge dismissed both applications, and both parties appealed. Justice O. Malik, sitting as chambers judge (2025 ABKB 143), found as fact that Xu orchestrated the fraud, that Liu impersonated Zhao before the lawyer, and that there was no evidence Zhao knew or should have known of the scheme. The chambers judge dismissed the landlord's summary judgment application and granted Zhao's summary dismissal application. Diamond-Dun then appealed to the Court of Appeal of Alberta.

Policy and legislative provisions at issue

The appeal turned on ss 3 to 5 of the Guarantees Acknowledgment Act, RSA 2000, c G-11 [Note: para 1 of the decision spells the title "Guarantees Acknowledgement Act," while the quotation at para 20 uses "Guarantees Acknowledgment Act"]. Section 3 provides that no guarantee has any effect unless the person entering into the obligation appears before a lawyer, acknowledges executing the guarantee, and signs the certificate in the lawyer's presence. Under s 4(1), once those requirements are met and the lawyer is satisfied through examination that the person understands the guarantee, the lawyer must issue a certificate in the prescribed form, and s 4(2) requires it to be attached to or noted on the guarantee. Section 5 states that a certificate which is substantially complete and regular on its face, and accepted in good faith by the creditor without reason to believe the Act was not complied with, shall be admitted in evidence and is conclusive proof of compliance.

Reasoning and analysis

Justices Strekaf, Antonio and Friesen rejected the landlord's position that the appeal raised a pure question of statutory interpretation reviewable for correctness. In the court's view, the appeal also raised, in addition to the interpretive issue, a question of whether the purported guarantee was a forgery and, if so, whether it should be enforced against Zhao in all the circumstances, which is a question of mixed fact and law reviewable for palpable and overriding error. The chambers judge's factual findings, application of law to fact and decision on summary resolution were also owed deference under Weir-Jones Technical Services Incorporated v Purolator Courier Ltd, 2019 ABCA 49.

On purpose, the court found the chambers judge's explanation incomplete. Beyond ensuring guarantors understand their liabilities, ss 3 to 5 also protect creditors by preventing guarantors from later pleading non est factum, promoting certainty and security in commerce by letting creditors rely on compliant certificates without more. Prior decisions, including Alberta (Treasury Branches) v Ronsdale Construction Inc and Pensionfund Properties Limited v RK Giblin & Associates Ltd, had held guarantors liable on facially compliant certificates even without factual compliance with s 3, or had excluded evidence aimed at disproving compliance. In Pensionfund, Justice McFadyen held that an apparently valid certificate precludes a defence of non-compliance with s 3, given the legislature's use of the word "conclusive."

Agreeing that s 5 obliges courts to admit a facially compliant certificate as conclusive proof of compliance, and that this will establish liability in most cases, the court nonetheless held it is not sufficient in every case. Pensionfund was distinguishable: those guarantors actually executed the guarantees after an opportunity to read them and obtain independent legal advice, and only the certificates went unsigned. Here, by contrast, Zhao's signatures on both documents were forged. The court noted the general common law rule that a forged document is a nullity, citing Eisenberg v 910234 Alberta Ltd, 2013 ABQB 580, aff'd 2014 ABCA 22, and Lee v Kassam, 2020 ABQB 608, and referred to Kevin P. McGuinness's observation in The Law of Guarantee that Canadian case law on forged guarantees is sparse.

As for the landlord's equitable argument, it contended it relied reasonably on the documents without any red flags, that Zhao was negligent, and that between two innocent parties the loss should fall on the one who enabled the wrongdoer. The court summarized the governing principles: negligence may estop a defendant from pleading non est factum (Marvco Colour Research Ltd v Harris), and may estop a principal or employer from denying an agent's or employee's authority even where fraud is committed (Welcome Investments; Distribulite). None of these principles applied on these facts.

Findings that Liu forged Zhao's signature and impersonated him, that Xu arranged the forgery of the amended lease [Note: Zhao's account at para 9 states Xu admitted forging Zhao's signature on the amended lease himself, while the chambers judge's finding at paras 13 and 25 is that Xu arranged for an unknown third party to do so; the source is inconsistent], and that there was no evidence Zhao knew or should have known of the scheme were reasonably supported by the evidence and attracted deference. The court found no palpable and overriding error in the conclusion that the forged guarantee was a nullity [Note: para 25 describes this conclusion as a question of mixed fact and law reviewable for palpable and overriding error, and in the following sentence as subject to review "on a reasonableness standard"; the source uses both formulations]. Section 5, the court held, does not impose automatic liability on an innocent third party where a facially valid certificate and guarantee are both proven forged without the purported guarantor's knowledge or participation, and where that person received no personal benefit from the transaction.

Ruling and overall outcome

Holding that the chambers judge correctly interpreted the Act and reasonably concluded there was no genuine issue requiring trial, the Court of Appeal dismissed Diamond-Dun's appeal on September 28, 2026, following a hearing on June 16, 2026. Zhao, the respondent, succeeded, leaving in place the dismissal of the landlord's summary judgment application and the summary dismissal of its claim against him. The memorandum of judgment orders no monetary award and does not address costs, so no amount can be identified as granted in Zhao's favour.