Canada: Does An Ontario Court Have The Jurisdiction To Enforce An Ontario Guarantee Against An Alberta Guarantor?

Last Updated: November 30 2017
Article by Jeffrey Alpert


It is common for lenders and other parties in Ontario to require a guarantor in another province to execute an Ontario form of guarantee. Typically, this form will contain a clause providing that the guarantee shall be governed by and construed in accordance with the laws of the Province of Ontario and that the guarantor accepts and irrevocably submits to the jurisdiction of the courts of the Province of Ontario. In the recent case of TFS RT Inc. v. Kenneth Dyck, 2017 ONSC 2780, the Ontario Superior Court of Justice reviewed the law regarding the ability of an Ontario court to assume jurisdiction over two guarantors in Alberta who signed personal guarantees in favour of a corporation in Ontario. Mr. Justice M. D. Faieta rejected the argument of the guarantors that the Ontario court lacked jurisdiction in respect of the proceeding and dismissed the guarantors' motion to stay the Ontario corporation's action for payment on the guarantees.


  1. TFS RT Inc. ("TFS") was a corporation incorporated pursuant to the laws of Ontario with an office in Toronto, which provided short-term financing, specializing in accounts receivable factoring arrangements.
  2. Green Patch Environmental Consulting Ltd. (the "Borrower") was a corporation incorporated pursuant to the laws of Alberta with an office in Edmonton.
  3. Kenneth Dyck ("Kenneth") and his son Shaun Dyck ("Shaun") were the only officers, directors, and shareholders of the Borrower.
  4. On August 12, 2015, TFS sent Kenneth a term sheet outlining the credit facility that TFS was prepared to provide to the Borrower, which included the requirement for personal guarantees from Kenneth and Shaun (the "Guarantors") in support of the Borrower. Kenneth signed the term sheet and returned it to TFS the following day.
  5. The loan documents, together with the personal guarantees (the "Guarantees") in favour of TFS signed by the Guarantors, were subsequently signed and returned by e-mail to TFS on August 25, 2015.
  6. Each of the Guarantees contained a choice of law clause and a forum selection clause that stated as follows:

    "This Guarantee shall be governed by and construed in accordance with the laws of the province of Ontario and the laws of Canada applicable therein and the Guarantor hereby accepts and irrevocably submits to the jurisdiction of the courts of the province of Ontario and acknowledges their competence and agrees to be bound by any judgment thereof except that nothing herein shall limit the Lender's right to bring proceedings against the Guarantor elsewhere."
  7. After the loan from TFS matured on December 31, 2015 and the Borrower failed to repay it in full, TFS demanded payment from the Guarantors pursuant to their Guarantees.
  8. On March 17, 2016, TFS entered into a forbearance agreement with the Borrower and the Guarantors which contained a clause that stated:

    "Each of the Borrower and the Guarantors hereby acknowledge and agree to and in favour of the Secured Parties as follows . . . The Guarantees are valid and a binding Obligation of the Guarantors to the Secured Parties enforceable in accordance with the respective terms . . .".
  9. Following the expiry of the forbearance period under the above Agreement, TFS arranged, with the Borrower's consent, for the appointment of a receiver over all of the Borrower's assets, undertaking and property, pursuant to an order of the Ontario Superior Court of Justice dated June 7, 2016.
  10. On July 11, 2016, TFS commenced an action against the Guarantors in the Ontario Superior Court of Justice for payment of $924,344.55 pursuant to their Guarantees.
  11. The Guarantors brought a motion to stay the proceeding against them on the basis that Ontario lacked jurisdiction to hear the proceeding. In support of this position, the Guarantors argued that even though they signed Guarantees which provided that the governing law was that of Ontario and that the jurisdiction for any disputes was Ontario:

    1. the choice of law and exclusive jurisdiction provisions in favour of Ontario were not brought to the Guarantors' attention before they signed their Guarantees; and
    2. they did not sign the Guarantees before a lawyer in Alberta, as required pursuant to the Alberta Guarantees Acknowledgement Act and that, as a result, under Alberta law their Guarantees had no effect.
  12. The jurisdiction analysis applied by the Court is a two stage test:

    1. Part 1: does Ontario have jurisdiction simpliciter - i.e. does Ontario meet the minimum threshold of connection to the subject matter of the legal action in order to allow it to assert jurisdiction; and
    2. Part 2: is Ontario forum non conveniens? – i.e. if the first stage is passed and jurisdiction simpliciter is established, should the Ontario court nonetheless decline to exercise jurisdiction for the reason that there is an alternative jurisdiction which is more appropriate.
  13. The Guarantors argued that the Ontario Court did not have jurisdiction simpliciter and, in the alternative, that even if jurisdiction simpliciter was established, the Ontario court should nonetheless stay the proceeding as Alberta was the more convenient forum. The Court dismissed the Guarantors' motion to stay the Ontario action by TFS on the Guarantees on both counts.

The Court's Reasoning

The Court reviewed the case law concerning the two-stage test to be applied in circumstances where jurisdiction is questioned by a party to the action. The analysis of the Court was as follows:

  1. Did the Ontario court have jurisdiction simpliciter  to hear the proceeding?

    1. This question turns on whether there exists a "presumptive connecting factor" between the subject matter of the litigation and the Ontario forum. The "presumptive connecting factor" relied upon by the Court in this case was the location in which the contract was made. If a contract was "made" in Ontario, this will be sufficient to establish a presumptive connecting factor. The Court held that the location in which a contract is made is the location that acceptance of the contract is received. As the Alberta Guarantors, who signed the Guarantees in Alberta, communicated their acceptance of terms of the Guarantees by e-mail sent to TFS in Ontario, the contract was found to have been made in Ontario and a presumptive connecting factor was established.
    2. If a presumptive connecting factor exists, the defendants may attempt to rebut the presumption by showing that the presumptive connecting factor points only to a weak relationship between the subject matter of the litigation and the presumptive forum. The Court held that the Guarantors had not satisfied the burden of rebutting this presumption.
  2. Should the Court decline to exercise its jurisdiction on the basis that another jurisdiction is a more appropriate forum for this action?

    1. In answering this question, the Court referred to the case law that applies when a contract contains a forum selection clause. In such cases, the Ontario courts will normally enforce a clause in a contract selecting Ontario as a forum, especially where the contract is between sophisticated commercial parties.
    2. The Court held that the Guarantors had failed to show "strong cause" that Alberta was the more appropriate forum for the action. In making this decision, the Court noted the following factors:

      1. The Guarantors were sophisticated business people and this was not the first time they had acted as personal guarantors.
      2. The Guarantors understood from the term sheet issued by TFS that the financing would not be provided unless personal guarantees were given. The Guarantors had the choice of refusing this request and seeking alternative financing from another party.
      3. The Guarantors' lawyers were involved in the transaction and the Guarantors had the opportunity to seek legal advice prior to the execution of their Guarantees.
      4. There was no obligation on TFS to draw the forum selection clause in the Guarantees to the Guarantors' attention.
      5. The Guarantors argued that they were deprived of the benefit of Alberta law relating to the Guarantees. In Alberta, no guarantee has any effect unless the guarantor appears before a lawyer, and the guarantor and the lawyer sign the required legal certificates relating to the guarantee. In rejecting this argument, the Court upheld the choice of law provision in the forum selection clause in the Guarantees, which provided that the laws of Ontario and Canada govern the Guarantees. The Court found that TFS had not gained an unfair advantage by the enforcement of the forum selection clause in the Guarantees.


This decision is a good decision for parties in Ontario who do business with guarantors in the other provinces. It provides an analysis of the factors that an Ontario court will consider in deciding whether it is entitled to assume jurisdiction over an out-of-province defendant. Take away points from the decision include the following:

  • The case underscores the importance of having a properly drafted clause in guarantees and other contracts confirming that these documents will be governed by and construed in accordance with the laws of the Province of Ontario and that the parties accept and submit to the jurisdiction of the courts of the Province of Ontario.
  • On the facts of this case, there was found to be no obligation on the party who prepared the documents to draw the forum selection clause to the attention of the Guarantors. According to the Court in this case, "a person who signs a contract, particularly a business person, is taken to have read the contract that he or she signs and to have agreed to its terms". This is a welcome decision for Ontario lenders and their lawyers because it promotes commercial certainty in interprovincial transactions.
  • The case stands as a reminder that lenders should be mindful of whether any laws exist in the jurisdiction of a non-resident party which could present an issue if the contract falls into dispute, notwithstanding the presence of a forum selection clause. In this case, had TFS required the Guarantors to execute the Guarantees in the presence of lawyer and obtain the required certificate under the Alberta Guarantees Acknowledgement Act, this would have significantly undermined the position of the Guarantors.
  • The case is a recent example which addresses the question: "where is a contract made"? In modern commercial transactions, it is common for signature pages to be transmitted across borders via e-mail. In such circumstances, many parties likely do not appreciate the significance of the location where acceptance of the contract is received as being a potentially important factor in a jurisdictional analysis. The nuances of this analysis could potentially lead to unintended consequences, particularly so where the intentions of the parties as to the governing forum are not evidenced in a forum selection clause.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Jeffrey Alpert
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions