National bank of canada v. Corbeil, [1991] 1 S.C.R. 117 (1991)

National Bank of Canada v. Corbeil, [1991] 1 S.C.R. 117

Les Équipements Lorac Ltée and

Pierre Corbeil Appellants v.

National Bank of Canada Respondent indexed as: national bank of canada v. corbeil

File No.: 21741.

1990: October 4; 1991: February 7.

Present: La Forest, L'Heureux-Dubé, Sopinka, Gonthier and McLachlin JJ.

on appeal from the court of appeal for quebec

Banks and banking operations -- Powers of banks -- Loans and security -- Bank's obligations towards defaulting debtor in exercising rights over property under ss. 178 and 179 of Bank Act -- Bank renouncing its rights and abandoning property to third party -- Whether bank liable to debtor for value of property as damages.

In 1982, the respondent bank extended credit to Lorac secured by rights and powers, determined pursuant to s. 178 of the Bank Act, over merchandise owned by Lorac. Corbeil, Lorac's director and principal shareholder, gave a personal guarantee for this loan and hypothecated one of his properties as collateral. In 1983, the bank took possession of Lorac's merchandise following its default to repay its loan. The bank advertised the merchandise for sale in a newspaper and, unable to find a new buyer, renounced its rights and abandoned the merchandise to a third party. The evidence at trial indicated that, in the bank's opinion, the merchandise was worth less than the cost of moving it and storing it. The bank instituted an action against Lorac and Corbeil for recovery of the balance of the loan. Lorac filed a cross-demand for the value of the goods which the bank had seized and abandoned to a third party. The Superior Court allowed the bank's action in part and ordered Lorac to pay the bank $33,254.94. It also allowed the cross-demand in part, ordering the bank to pay $ 57, 701.88 in damages to Lorac which was the value of ...

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