Ontario Court of Appeal Affirms Equipment Lessor’s Right to Sue on Guarantee Despite Assignment of Lease Rights

On December 3, 2019, the Ontario Court of Appeal (the “OCA”) released its decision in 1951584 Ontario Inc. (Maxium Financial Services Inc.) v. Altavision Plus Inc. (“Altavision”),¹ upholding a summary judgment in respect of personal guarantees of equipment lease obligations.

One of the grounds of appeal asserted by the appellant guarantors was that the equipment lessor (the “Lessor”) lacked standing to enforce the guarantees because it had assigned its rights under the leases pursuant to a master purchasing and service agreement (the “MPSA”). In rejecting this argument, the OCA found that the Lessor had only assigned the income stream from the leases, but not its right to enforce those receivables. Even if the Lessor had assigned the right to enforce such receivables, it would still be bound under the MPSA to enforce as agent. The OCA reached the same conclusion with regard to the Lessor’s standing to enforce the guarantees.

The Altavision decision affirms the standard industry model for bulk lease assignments and thus will be of comfort to both lessors and funders.

The Financial Services Group at Aird & Berlis regularly advises equipment lessors and funders under master lease purchase agreements, as well as creditors in guarantee enforcement actions. Details are available at our Financial Services webpage.