69971 Manitoba Ltd. v. National Bank of Canada, (1995) 100 Man.R.(2d) 214 (CA)

• Judge: Scott, C.J.M., Twaddle and Helper, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: December 09, 1994
• Jurisdiction: Manitoba
• Citations: (1995), 100 Man.R.(2d) 214 (CA)

69971 Man. v. Nat. Bk. (1995), 100 Man.R.(2d) 214 (CA);

    91 W.A.C. 214

MLB headnote and full text

69971 Manitoba Ltd., carrying on business as Barrin Produce (plaintiff/respondent) v. National Bank of Canada (defendant/appellant)

(Suit No. AI 94-30-01840)

Indexed As: 69971 Manitoba Ltd. v. National Bank of Canada

Manitoba Court of Appeal

Scott, C.J.M., Twaddle and Helper, JJ.A.

March 27, 1995.

Summary:

A bank allegedly wrongly paid out funds on a letter of credit and debited the custom­er's account. The customer sued for dam­ages.

The Manitoba Court of Queen's Bench, in a decision reported 91 Man.R.(2d) 197, allowed the action, holding that the customer was entitled to recover the amount of the improper debit.

The Manitoba Court of Queen's Bench, by addendum, reported 94 Man.R.(2d) 80, disallowed the customer's entitlement to prejudgment interest. The bank appealed respecting quantum and liability.

The Manitoba Court of Appeal dismissed the appeal respecting liability, but allowed the appeal respecting quantum. The court remitted the matter to the trial court for an accounting in accordance with the findings of the trial judge.

Banks and Banking - Topic 4523

Letters of credit - Payment by bank - Autonomy of documentary letters of credit - [See Banks and Banking - Topic 4526 ].

Banks and Banking - Topic 4526

Letters of credit - Payment by bank - Documentary noncompliance with terms of letter of credit - A customer obtained a letter of credit to buy oranges from a foreign supplier which specified that com­mercial documents were to accompany the draft - The bank received an international bill of lading describing the produce as being oranges and lemons but did not notify the customer of this discrepancy - The bank released the commercial docu­ments, transferring ownership of the pro­duce to the customer and obliging the bank to honour the letter of credit - The bank debited the customer's account - The customer sued for damages - The Manitoba Court of Appeal affirmed that the bank was liable where it accepted documentation which was inconsistent with the terms of the credit without the custom­er's approval.

Banks and Banking - Topic 4603

Letters of credit - Remedies of debtor - Damages - Measure of - A bank hon­oured a letter of credit knowing that one of the accompanying documents was not in accordance with the terms of the letter of credit - The bank debited the customer's account - The customer sued for damages - The Manitoba Court of Queen's Bench held that the customer could recover the amount which the bank had improperly debited its account with no deduction for the proceeds obtained from the sale of the goods - The Manitoba Court of Appeal held that the customer must account to the bank for the sale proceeds - See para­graphs 13 to 37.

Cases Noticed:

Bank of Nova Scotia v. Angelica-White­wear Ltd. et al., [1987] 1 S.C.R. 59; 73 N.R. 158, consd. [para. 7].

Yates v. Yates (1992), 76 Man.R.(2d) 224; 10 W.A.C. 224 (C.A.), refd to. [para. 16].

R. v. Chartrand (1992), 81 Man.R.(2d) 81; 30 W.A.C. 81 (C.A.), refd to. [para. 19].

R. v. Sellars, [1980] 1 S.C.R. 527; 32 N.R. 70, refd to. [para. 19].

Brunner v. Greenslade, [1970] 3 All E.R. 833, refd to. [para. 19].

United City Merchants (Investments) Ltd. et al. v. Royal Bank of Canada et al., [1983] A.C. 168 (H.L.), refd to. [para. 21].

Matthewson et al. v. Thompson et al., [1925] 2 D.L.R. 1211 (Sask. C.A.), refd to. [para. 32].

Thompson v. Big Cities Realty & Agency Co. (1910), 21 O.L.R. 394 (Div. Ct.), refd to. [para. 33].

Toronto-Dominion Bank v. Spiller (1982), 135 D.L.R.(3d) 572 (B.C.S.C.), refd to. [para. 33].

Authors and Works Noticed:

Black's Law Dictionary (6th Ed. 1990) [para. 31].

Davis, The Law Relating to Commercial Letters of Credit (Sir Isaac Pitman & Sons Ltd.) (1955), p. 170 [para. 29].

Dolan, J.F., Letter-of-Credit Disputes Between the Issuer and Its Customer: The Issuer's Rights Under the Misnamed 'Bifurcated Standard' (Sept./Oct. 1988), 105 Bank L.J. 380, gen­erally [para. 21].

Counsel:

C.R. MacArthur, Q.C., and J.G. Penner, for the appellant;

D.G. Hill and D.A. Brownridge, for the respondent.

This appeal was heard on December 9, 1994, before Scott, C.J.M., Twaddle and Helper, JJ.A., of the Manitoba Court of Appeal. The decision of the court was delivered by Scott, C.J.M., on March 27, 1995.