239199 Alberta Ltd. v. Patel et al., (1993) 145 A.R. 10 (CA)

• Judge: Harradence, Bracco and Foisy, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: August 03, 1993
• Citations: (1993), 145 A.R. 10 (CA)

239199 Alta. v. Patel (1993), 145 A.R. 10 (CA);

         55 W.A.C. 10

MLB headnote and full text

Bank of Montreal (appellant) v. 239199 Alberta Ltd. (respondent) and Ramesh M. Patel MTCL Properties Ltd., Blueberry Resources Ltd. and Budra Research Ltd. (not parties to appeal)

(Appeal No. 13264)

Indexed As: 239199 Alberta Ltd.  v. Patel et al.

Alberta Court of Appeal

Harradence, Bracco and Foisy, JJ.A.

August 3, 1993.

Summary:

A company sued a bank to recover funds transferred from its account on the instruc­tion of one of the company's directors. The funds were transferred to companies that the direc­tor controlled. The funds were trans­ferred contrary to the company's instructions that any account transactions required two of three signatures. The bank relied on an account verification agreement to relieve it of liability.

The Alberta Court of Queen's Bench allowed the action against the bank - see 126 A.R. 308. The bank appealed on the ground that the trial judge erred in finding that the account verification agreement did not constitute a defence. There was no appeal of the finding that the bank was negligent.

The Alberta Court of Appeal dismissed the appeal.

Banks and Banking - Topic 1604

Liability of banks to customers - Defences - Release, account verification agreements - A company's instructions to its bank required the authority of two of three directors respecting transfers from its account - The bank on the instructions of one director transferred funds to companies that the director controlled - The company sued the bank and the bank defended on the basis of an account verification agree­ment (release) signed by the company - The Alberta Court of Appeal held the bank liable to the company - The court held that the language of the release was not broad enough to include the bank's negli­gence (see paragraph 16).

Banks and Banking - Topic 1606

Liability of banks to customers - Defences - Release, interpretation - The Alberta Court of Appeal stated that the terms of a release, that passes risks from a bank to a customer, such as an account verification agreement, "must be brought home ex­pressly if they are to be effective" (see paragraph 14).

Banks and Banking - Topic 2806

Bank accounts - Agreements respecting - Account verification agreements - [See Banks and Banking - Topic 1604 ].

Cases Noticed:

Arrow Transfer Co. v. Royal Bank of Canada (1972), 27 D.L.R.(3d) 81 (S.C.C.), refd to. [para. 9].

Bad Boy Appliances & Furniture Ltd. v. Toronto Dominion Bank (1972), 25 D.L.R.(3d) 257 (Ont. C.A.), refd to. [para. 9].

Banque provinciale v. Syndicat des camion­neurs artisans du Québec (1970), 11 D.L.R.(3d) 610 (Que. C.A.), refd to. [para. 9].

Rutherford v. Royal Bank of Canada, [1932] 2 D.L.R. 332 (S.C.C.), refd to. [para. 10].

Kelly Funeral Homes Ltd. v. Canadian Imperial Bank of Commerce (1990), 72 D.L.R.(4th) 276 (Ont. H.C.), refd to. [para. 11].

Cavell Developments Ltd. v. Royal Bank of Canada (1991), 54 B.C.L.R.(2d) 1 (C.A.), refd to. [para. 15].

Royal Bank v. Creighton (Larry) Pro­fessional Corp. (1989), 95 A.R. 40; 65 Alta. L.R.(2d) 178 (C.A.), refd to. [para. 15].

BG Checo International Ltd. v. British Columbia Hydro and Power Authority (1993), 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241 (S.C.C.), refd to. [para. 21].

Counsel:

H.A. Gorman, for the appellant;

P.F. Mahoney, for the respondent.

This appeal was heard before Harradence, Bracco and Foisy, JJ.A., of the Alberta Court of Appeal. On August 3, 1993, Harradence, J.A., delivered the following judgment for the Court of Appeal.