BMO wins appeal on personal guarantees

The Ontario Court of Appeal upheld BMO in a personal guarantee dispute, confirming that verbal promises from bank staff cannot override the written terms of a signed guarantee.

Court rejects guarantor’s claim of unmet conditions

On July 29, 2026, the appellate panel dismissed an appeal filed by a guarantor who argued that his personal guarantee for an overdraft facility was conditional on receiving full signing authority for withdrawals over $5,000 and immediate online access to the account. The individual, an independent contractor for Sirius Power Corp, presented himself to the Bank of Montreal as the company’s vice president and chief operating officer, and signed the guarantee after obtaining independent legal advice.

The guarantee itself stated it was unconditional and included a clause asserting it superseded any prior discussions. A motion judge had previously found that a BMO loan officer had verbally agreed to the requests but had not promised that the bank would withhold credit until those requests were fulfilled. The appellate judges found no error in that reasoning and held that the written guarantee controlled the parties’ obligations.

Financing for Sirius became available on November 18, 2021, yet online access was not provided until December 21. Bank testimony indicated the access was not finalized internally until mid‑to‑late December. During that interval, Sirius exceeded its $350,000 overdraft limit, including a single cheque over $5,000 signed solely by the director. The issue was raised at a March 2022 meeting, months after the overdraft had already been used.

Legal reasoning and costs awarded

Justice M. Claire Wilkinson of the Superior Court of Justice earlier rejected arguments that verbal assurances created conditions precedent, that the individual was misled into signing, and that BMO owed a duty to monitor the director’s spending. She ordered a mini‑trial because affidavits conflicted, but ultimately ruled in favor of the bank in an April 11, 2025 decision.

On appeal, Justices Sossin, Monahan and Osborne affirmed the lower court’s conclusions. The panel did not need to hear further testimony on the conditions‑precedent and misrepresentation issues, and it declined to consider a new negligence claim raised for the first time on appeal, noting that it had not been pleaded before the motion judge.

The appeal was dismissed, and BMO was awarded costs of $18,000 from the guarantor, inclusive of all expenses.

For advisors, the takeaway is clear: every condition must be captured in writing. Verbal assurances, even when delivered by senior bank staff, will not stand against a signed guarantee that contains an “entire agreement” clause and has been reviewed by independent counsel.

Parties considering personal guarantees should anticipate that courts will prioritize the contract’s text over informal statements. This approach reduces uncertainty, but it also places a heavier burden on borrowers to negotiate and document any special terms before signing.

Consequently, lenders are likely to reinforce the “entire agreement” language in future drafts.