Legal Blog

Guarantees & Double Recovery

Hilson v. 1336365 Alberta Ltd. 2019 Ont CA

A mortgagee was given a number of standalone guarantees of 25 mortgages. She sued on the mortgages. The guarantors claimed that she was too late in her action and that the two-year period, under the Limitations Act, 2002, had expired. The Court held that the Real Property Limitations Act, with its 10 –year limitation period, applied to a standalone guarantee of a mortgage. The mortgagee had also sued her lawyer, claiming that the lawyer had not ensured that she received adequate security for the mortgage loans. The mortgagee had settled her action with the lawyer and the mortgagor wanted to receive credit for that settlement. The Court noted that there can be no double recovery, but the evidence did not support a conclusion that the mortgagee had recovered anything on the debt that the guarantors guaranteed. That recovery depended on the solvency of the guarantors and their means to pay what they owed. Until the mortgagee achieved full or substantial recovery of the debt, there was no double recovery.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.