Executive Summary: Key Legal and Evidentiary Issues

• Non est factum was raised by guarantors Suli Lou and 1128072 B.C. Ltd. to resist judgment on a guarantee securing a $15,000,000 loan.
   
• Summary determination remained appropriate under Cepuran v. Carlton, 2022 BCCA 76, which held that the mere existence of a triable issue is no longer good reason to refer a petition to the trial list.
   
• WeChat messages tendered through Mr. Zhang's affidavit raised double hearsay and authentication concerns, and the court found they would not assist the guarantors even if admitted.
   
• A mistaken belief that liability was capped at each guarantor's proportionate equity share went only to the scope of the guarantee, not to its fundamental character.
   
• Carelessness independently barred the defence, as neither signatory took reasonable steps to understand the document, such as asking for an explanation, consulting another lawyer, or having it translated.
   
• Costs on an indemnity basis were left for a further hearing, with the court noting s. 20 of the Law and Equity Act and the presumptive enforceability of clear contractual indemnity provisions.
   

Facts of the case

In 1401946 B.C. Ltd. v. Vanhome Ventures 2 Holdings Ltd., 2026 BCSC 1753, the petitioners, 1401946 B.C. Ltd., Peterson Investment Group Inc., and Terrapin Mortgage Investment Corp., entered into a Commitment Letter dated May 17, 2023 as lenders with Vanhome Ventures 2 Holdings Ltd. and Vanhome Ventures 2 Limited Partnership as borrowers. A group of guarantors signed on as well. They included Suli Lou, 1128072 B.C. Ltd. ("112"), Xiaomeng Ju, and Canada Chuangjing Real Estate Development Ltd. ("Development Ltd."). The limited partnership was engaged in a real estate development project. Under the Commitment Letter, the petitioners advanced a loan of $15,000,000. It was secured by, among other things, a mortgage over two vacant development properties in Coquitlam, a general security agreement over the borrowers' personal property, and a Guarantee and Postponement executed by each guarantor.

Hong Zhang is the sole director of 112 and the husband of Ms. Lou. Both immigrated from China to Canada in 2013 and speak Mandarin as their native language, and they deposed that their English is very limited or rudimentary. According to Ms. Lou, by 2023 she had grown frustrated with the project's slow progress. She initially refused when Hai Peng Yang, the architect and chief representative of the limited partnership, asked her to sign the new loan documents [the decision states at para. 16(c) that "Ms. Yang told Mr. Yang" she still refused; the context suggests Ms. Lou is meant]. She deposed that Mr. Yang and his wife, Jin Tao, pressed her repeatedly. They told her there was no risk to investors and that she would at most be responsible for 5% of the debt, corresponding to the 5% interest 112 originally held in the limited partnership. On May 24, 2023, she signed at the Richmond office of Collingwood Law in a meeting of about 10 minutes with lawyer Andrew Xu. She said he pointed out where to sign without explaining the documents, did not advise her to obtain independent legal advice, and did not give her copies.

Mr. Zhang was in China when the financing was arranged. He deposed that at a meeting on May 29, 2023, Mr. Yang told him the guarantors would only be liable for a portion of the debt matching their percentage interest. According to Mr. Zhang, Mr. Yang also said that Jessie Wen, a vice president of Gentai Financial Services Corporation, had told him the guarantees would impose no additional financial risk on the limited partners. Loan documents were emailed to Mr. Zhang on May 30, 2023 (early May 31, Beijing time), and he signed them for 112 during a video conference with Mr. Xu on June 1, 2023 (Beijing time). He, too, deposed that Mr. Xu did not explain the documents in any detail or recommend independent legal advice. On June 2, 2023, Mr. Zhang emailed the signed documents back. That same day, Mr. Yang forwarded him WeChat messages he had previously exchanged with Michael Lu, another member of the project's management team. The messages included a screenshot of what appeared on its face to be a message from "Jessie" about another guarantor's execution of the documents.

Mr. Xu acted for the borrowers and guarantors other than Ms. Ju, who had her own lawyer, Mr. Chen, and he was independent from the petitioners. Evidence also showed that Ms. Lou had previously executed English-language mortgages in favour of the Canadian Imperial Bank of Commerce in 2013, The Toronto-Dominion Bank in 2017, and her holding company Pacifica in 2022 [para. 20 opens with "In 2017" before listing instruments dated 2013, 2017, and 2022; the chronology is unclear in the source].

The borrowers and guarantors defaulted, and the proceeding was commenced on August 25, 2025. Ms. Ju and Development Ltd. raised a non est factum defence. Shortly before the petition hearing, Ms. Lou and 112 advised they would raise the same defence, so relief against those four guarantors was adjourned. Order nisi was granted on October 30, 2025, declaring $16,378,521.51 due and owing as of that date, with judgment in that amount against all other borrowers and guarantors. The petitioners later settled with Ms. Ju and Development Ltd. Madam Justice Wilkinson heard the application against Ms. Lou and 112 in chambers on June 25 and July 27, 2026. At the hearing, the respondents asked that the matter be converted to an action and referred to the trial list.

Policy and legislative provisions at issue

The Commitment Letter provided for joint and several guarantees from the guarantors under the heading "Security." Written in English, the Guarantee and Postponement opens with the guarantors' promise to guarantee payment to the lenders of "all debts and liabilities... present and future, direct or indirect, absolute or contingent" owing by the borrowers. On costs, the borrowers are liable for the petitioners' costs on a solicitor and own client basis under the Commitment Letter, the mortgage, and the general security agreement.

Section 20(2) of the Law and Equity Act, RSBC 1996, c 253, applies in a foreclosure where costs are awarded. It provides that the court may, despite any covenant or term of a mortgage respecting costs, order that costs be assessed as party and party costs or as special costs under the Supreme Court Civil Rules. On procedure, the court relied on the principle from Hryniak v. Mauldin, 2014 SCC 7, that the Rules aim at the just, speedy, and inexpensive determination of proceedings on their merits.

Reasoning and analysis

Before Cepuran, a foreclosure petition would be converted into an action where a bona fide triable issue arose. Such an issue is one the court cannot resolve on the affidavits and documentary evidence and that would change the outcome. Although the onus remains on the petitioner, bald assertions are insufficient, and the party alleging a defence must establish an evidentiary foundation for it. Cepuran held that the starting point for a petition is summary procedure, and that the mere fact of a triable issue is no longer good reason to depart from it. Disputed questions of fact or law, the court added, do not justify converting a statutorily mandated summary procedure into an action. Where the evidence cannot resolve them, hybrid procedures such as cross-examination may be ordered.

Evidentiary problems undermined the WeChat material. Mr. Zhang's account of what Jessie Wen allegedly told Mr. Yang was double hearsay: it was outside his personal knowledge, could not be tested through cross-examination, and concerned another guarantor who signed later. The other WeChat message was not sent to Mr. Zhang, and he could not say for certain whether it came from Jessie Wen, leaving it unauthenticated. Even if admitted, the court found the messages did not help the respondents. They showed discussion of a separate agreement among the equity holders to limit liability as between themselves [para. 25 describes these as messages "between Ms. Ju and Mr. Lu," whereas para. 24 describes them as exchanged between Mr. Yang and Michael Lu]. Neither Ms. Lou nor Mr. Zhang alleged that pressure vitiated their will, and neither relied on undue influence.

Turning to the defence itself, the court described non est factum as narrow and exceptional, carrying a heavy burden. It applied the principles summarized in Farrell Estates Ltd. v. Win-Up Restaurant Ltd., 2010 BCSC 1752. The party seeking to disown a signature must show the document is fundamentally different from what they believed they were signing. The court must also consider whether the signer was careless and whether the party relying on the document is innocent. Both Ms. Lou and Mr. Zhang admitted they knew they were signing a guarantee of payment. Their claim was only that they believed liability would be limited to their equity share. Following GFS British Columbia Inc. v. Olive U Foods Ltd., 2014 BCSC 113, the court held that a misunderstanding about the scope or amount of liability does not make a document fundamentally different. It accepted that the value of their equity positions was vastly less than their possible liability under the guarantee, but that did not change the character of the instrument.

Carelessness was a separate barrier. Relying on Marvco Colour Research Ltd. v. Harris, [1982] 2 S.C.R. 774, and Equitable Bank v. Bal, 2025 ONSC 7130, the court held that a person who signs without reading or making reasonable inquiry cannot later plead mistake as to content. This rule places the loss on the person who could have avoided it and also serves certainty and security in commerce.

The respondents argued that the petitioners never advised the guarantors to seek independent legal advice. In response, the court found that Ms. Lou and 112 were not accommodation parties but equity stakeholders in the borrower who directly benefited from the loan. Under RBC v. Precision Markings Inc., 2025 ONSC 169, a shareholder or officer of the borrower who fails to read the documents shows not mere carelessness but indifference. Neither Ms. Lou nor Mr. Zhang denied being a person of full capacity. The court found both were educated, had made significant investments in the project, and fully understood the concept of a loan and a non-borrower guaranteeing its repayment. They also attested that they can read some English, and the guarantee's first sentence states in English that it covers payment "of all debts and liabilities" of the borrowers.

To the extent Mr. Xu gave no advice or negligent advice, the court said Ms. Lou and Mr. Zhang would be entitled to recover any losses from him. Citing Bank of Montreal v. Sidhu, [1997] B.C.J. No. 1664 (S.C.), it held that even if neither Mr. Xu nor Mr. Chen explained the guarantee to them, they were "careless guarantors" for failing to ask [Mr. Chen is identified at para. 18 as Ms. Ju's lawyer, not as counsel to Ms. Lou or Mr. Zhang]. Ms. Lou's own evidence reinforced the point: she regularly signed project documents based on others' explanations without independent verification. Nothing prevented either of them from asking for an explanation, consulting another lawyer, or having the document translated [para. 57 refers to carelessness "discussed in Farm Credit," a case not otherwise cited in the reasons].

Farrell Estates did not assist the respondents on the misrepresentation point. In that case, the guarantor told the contractual counterparty directly, on no fewer than five occasions, that she would not provide a guarantee. The counterparty then gave the job of obtaining her signature to the person who stood to be relieved of dire financial consequences if she signed. It made no inquiries when her position changed without explanation. Here, Ms. Lou and Mr. Zhang never communicated any reluctance to the petitioners, nor did they seek confirmation that their liability would be limited. There was no allegation of communications between the petitioners and either signatory, and no evidence that the petitioners knew of the alleged reluctance or misrepresentation. On that record, the court found no bona fide issue that would change the outcome.

Ruling and overall outcome

Madam Justice Wilkinson found the matter suitable for summary determination and granted the petitioners judgment against Ms. Lou and 112, leaving the petitioners as the successful party. The reasons do not state the dollar amount of that judgment. The only figure fixed in the proceeding is the $16,378,521.51 declared owing as of October 30, 2025 under the order nisi, for which judgment was entered against the other borrowers and guarantors. Costs remain unresolved. The petitioners sought indemnity costs under the security, which had been awarded against the other borrowers and guarantors under the order nisi, but the issue was not fully argued for lack of time. The court observed that s. 20 of the Law and Equity Act refers only to mortgage terms, not to loan agreements or other forms of non-mortgage security. It also noted the factors from Blueshore Financial v. 1134038 B.C. Ltd., 2023 BCSC 2304, and cited Peace River Partnership v. Cardero Coal Ltd., 2023 BCCA 351, for the presumptive enforceability of clear contractual indemnity provisions. Failing agreement, the parties were invited to contact scheduling within 30 days to book a 30-minute costs hearing, so no exact monetary award can be determined from this decision.