Bk. of Am. v. Mutual Trust, (2002) 287 N.R. 171 (SCC)

JudgeMcLachlin, C.J.C., L'Heureux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ.
CourtSupreme Court (Canada)
Case DateDecember 11, 2001
JurisdictionCanada (Federal)
Citations(2002), 287 N.R. 171 (SCC);2002 SCC 43;113 ACWS (3d) 56;211 DLR (4th) 385;49 RPR (3d) 1;JE 2002-795;287 NR 171;[2002] 2 SCR 601;[2002] CarswellOnt 1114;[2002] ACS no 44;159 OAC 1;[2002] SCJ No 44 (QL)

Bk. of Am. v. Mutual Trust (2002), 287 N.R. 171 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

....................

Temp. Cite: [2002] N.R. TBEd. AP.024

Bank of America Canada (appellant) v. Clarica Trust Company (respondent)

(27898; 2002 SCC 43; 2002 CSC 43)

Indexed As: Bank of America Canada v. Mutual Trust Co. et al.

Supreme Court of Canada

McLachlin, C.J.C., L'Heureux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ.

April 26, 2002.

Summary:

Reemark planned to build a 300 unit con­dominium project (Project) which was syn­dicated out to investors in limited partner­ships and otherwise. Reemark obtained a takeout mortgage commitment (TOC) for $36.5 million from Mutual Trust Co. (MT), to be drawn down upon completion. MT understood that Reemark would utilize the TOC to obtain construction loan financing. Reemark obtained a $33 million construction loan from the Bank of America Canada (BAC). Two weeks later, Reemark, MT and BAC entered into an assignment of the TOC under which MT agreed to direct the pro­ceeds of the takeout financing under the TOC to BAC. The condominium was regis­tered, but MT never advanced funds pursu­ant to the TOC or a subsequent amended TOC (ATOC). BAC appointed a receiver of the Project. The building was sold for $22.5 million, leaving a significant shortfall of principal and accrued compound interest. BAC sued MT et al. for damages. MT coun­terclaimed against BAC et al. At trial, BAC withdrew its claims against all the defend­ants except MT, and MT withdrew its coun­terclaim.

The Ontario Court (General Division), in a decision reported at 59 O.T.C. 325, held that MT breached the TOC, the TOC assignment and the ATOC. It awarded damages to BAC. The court held that only a minor adjustment to the damages should be made for BAC's failure to mitigate (caused by permitting the vacancy rate to exceed 10% of the units). The court awarded compound interest both before and after judgment at the rate spec­ified in the loan agreement referenced in the TOC assignment. MT appealed the finding of liability and the order for compound interest.

The Ontario Court of Appeal, in a decision reported at 130 O.A.C. 149, allowed the appeal only to the extent of substituting an order that interest be paid as provided in s. 128 of the Courts of Justice Act. BAC appealed.

The Supreme Court of Canada allowed the appeal, affirming the trial judge's interest award.

Contracts - Topic 4023

Remedies for breach - Damages - Extent of liability - Losses attributable to breach -The Supreme Court of Canada stated that "In contract, restitution damages can be invoked when a defendant has, as a result of his or her own breach, profited in excess of his or her expected profit had the contract been performed but the plaintiff's loss is less than the defendant's gain. So the plaintiff can be fully paid his damages with a surplus left in the hands of the defendant. This occurs with what has been described as an efficient breach of con­tract. In some but not all cases, the defen­dant may be required to pay such profits to the plaintiff as restitution damages. ... Courts generally avoid this measure of damages so as not to discourage efficient breach (i.e., where the plaintiff is fully compensated and the defendant is better off than if he or she had performed the contract). ... Efficient breach is what econ­omists describe as a Pareto optimal out­come where one party may be better off but no one is worse off, or expressed differently, nobody loses. Efficient breach should not be discouraged by the courts. This lack of disapproval emphasizes that a court will usually award money damages for breach of contract equal to the value of the bargain to the plaintiff." - See para­graphs 30 to 31.

Interest - Topic 811

Equity - General - Calculation of interest (simple or compound) - The Supreme Court of Canada discussed a court's power to award compound interest for breach of contract - See paragraphs 41 to 52 - The court stated that "The court's common law power to award damages flows from the application of contract law. In addition, ss. 128(4)(g) and 129(5) CJA [Courts of Jus­tice Act (Ont.)], provide statutory auth­ority to award compound pre-judgment and post-judgment interest according to this common law power. The court also has an equitable power to award compound inter­est, as has traditionally been done in cases of, inter alia, wrongful retention of funds and s. 129(5) CJA provides statutory auth­ority to award compound post-judg­ment interest according to this equitable power." - See paragraph 52.

Interest - Topic 2010

Agreement to pay interest - General - Calculation of interest (simple or com­pound) - The Supreme Court of Canada stated that "An award of compound pre- and post-judgment interest will generally be limited to breach of contract cases where there is evidence that the parties agreed, knew, or should have known, that the money which is the subject of the dispute would bear compound interest as damages. It may be awarded as conse­quential damages in other cases but there would be the usual requirement of proving that damage component." - See paragraph 55.

Interest - Topic 3519

Statutory interest - On judgments - Simple or compound interest - Reemark undertook to build a condominium project, obtained a $36.5 million takeout mortgage commitment (TOC) from Mutual Trust Co. (MT) to be drawn down upon completion, and obtained a $33 million construction loan from the Bank of America Canada (BAC) - Reemark, MT and BAC entered into an assignment of the TOC under which MT agreed to direct the proceeds of the takeout financing under the TOC to BAC - The condominium was registered, but MT never advanced funds under the TOC or a subsequent amended TOC (ATOC) - BAC sued MT for damages - The trial judge held that MT breached the TOC, the TOC assignment and the ATOC - The trial judge awarded compound interest both before and after judgment at the rate specified in the loan agreement referenced in the assignment - The Supreme Court of Canada affirmed the trial judge's interest award - See para­graphs 53 to 61.

Interest - Topic 3519

Statutory interest - On judgments - Simple or compound interest - [See Interest - Topic 811 and Interest - Topic 2010 ].

Interest - Topic 5010

Interest as damages (prejudgment interest) - General principles - Calculation of interest - Simple or compound - [See Interest - Topic 811 , Interest - Topic 2010 and first Interest - Topic 3519 ].

Interest - Topic 5303

Interest as damages (prejudgment interest) - Interest on payment of money or debt withheld - Amount due under a contract - [See Interest - Topic 811 , Interest - Topic 2010 and first Interest - Topic 3519 ].

Words and Phrases

Right other than under this section - The Supreme Court of Canada discussed the meaning of this phrase as found in ss. 128(4)(g) and 129(5) of the Courts of Justice Act, R.S.O. 1990, c. C-43, respecting interest awards - See para­graphs 41 to 52.

Cases Noticed:

Hungerfords v. Walker (1989), 171 C.L.R. 125 (Aust. H.C.), refd to. [para. 15].

Haack v. Martin, [1927] S.C.R. 413, refd to. [para. 27].

Costello and Dickhoff v. Calgary (City) (1997), 209 A.R. 1; 160 W.A.C. 1; 152 D.L.R.(4th) 453 (C.A.), refd to. [para. 34].

Rowan v. Toronto R.W. Co. (1918), 43 O.L.R. 164 (C.A.), refd to. [para. 35].

Brock v. Cole (1983), 142 D.L.R.(3d) 461 (Ont. C.A.), refd to. [para. 41].

Claiborne Industries Ltd. v. National Bank of Canada (1989), 34 O.A.C. 241; 59 D.L.R.(4th) 533 (C.A.), refd to. [para. 41].

Confederation Life Insurance Co. v. Shep­herd (1996), 88 O.A.C. 398 (C.A.), refd to. [para. 41].

Air Canada v. Liquor Control Board (Ont.) et al., [1997] 2 S.C.R. 581; 214 N.R. 1; 102 O.A.C. 1, refd to. [para. 41].

Westdeutsche Landesbank Girozentrale v. Islington London Borough Council, [1996] 2 All E.R. 961 (H.L.), refd to. [para. 43].

Friedmann Equity Developments Inc. v. Final Note Ltd. et al., [2000] 1 S.C.R. 842; 255 N.R. 80; 134 O.A.C. 280, refd to. [para. 43].

Hadley v. Baxendale (1854), 9 Ex. 341; 156 E.R. 145, refd to. [para. 47].

Statutes Noticed:

Courts of Justice Act, R.S.O. 1990, c. C-43, sect. 128(4)(g), sect. 129(5) [para. 9].

Authors and Works Noticed:

Sorter, George H., Ingberman, Monroe J., and Maxi­mon, Hillel M., Financial Account­ing: An Events and Cash Flow Approach (1990), p. 14 [para. 22].

Waddams, S.M., The Law of Damages (3rd ed. 1997), pp. 267 [para. 26]; 437 [para. 37]; 473 [para. 31]; 474 [para. 30].

Waldron, Mary Ann, The Law of Interest in Canada (1992), pp. 127, 128 [para. 36].

Counsel:

Frank J.C. Newbould, Q.C., Benjamin T. Glustein, and Aaron A. Blumenfeld, for the appellant.

Earl A. Cherniak, Q.C., and Kirk F. Stevens, for the respondent.

Solicitors of Record:

Borden Ladner Gervais LLP, Toronto, Ontario, for the appellant.

Lerner & Associates LLP, Toronto, Ontario, for the respondent.

This appeal was heard on December 11, 2001, by McLachlin C.J.C. and L'Heur­eux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ., of the Supreme Court of Canada. Major, J., delivered the following decision in both official languages for the court on April 26, 2002.

To continue reading

Request your trial
289 practice notes
  • Bhasin v. Hrynew et al., (2014) 584 A.R. 6
    • Canada
    • Canada (Federal) Supreme Court (Canada)
    • 12 d3 Fevereiro d3 2014
    ...453 N.R. 273; 416 N.B.R.(2d) 1; 1079 A.P.R. 1; 2014 SCC 12, refd to. [para. 70]. Bank of America Canada v. Mutual Trust Co. et al., [2002] 2 S.C.R. 601; 287 N.R. 171; 159 O.A.C. 1; 2002 SCC 43, refd to. [para. Greenberg v. Montreal Trust Co., Meffert and Melfi (1985), 9 O.A.C. 69; 50 O.R.(2......
  • Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19
    • Canada
    • Supreme Court (Canada)
    • 24 d5 Julho d5 2020
    ... 2019 BCCA 187 , 25 B.C.L.R. (6th) 268 ; Authentic T‑Shirt Co. ULC v. King, 2016 BCCA 59 ; Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601 ; Kingstreet Investments Ltd. v. New Brunswick (Finance), 2007 SCC 1 , [2007] 1 S.C.R. 3 ; Peel (Regional Municipality......
  • Spina v. Shoppers Drug Mart Inc.,
    • Canada
    • Superior Court of Justice of Ontario (Canada)
    • 17 d5 Fevereiro d5 2023
    ...of drugs that could be dispensed by a pharmacist with a script from a physician. [33] Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 at para. 26; Dasham Carriers Inc. v. Gerlach, 2013 ONCA 707 at para. 29; Baud Corp., N.V. v. Brook, [1979] 1 S.C.R. 633 at para. [34] Koufos v. C. Cz......
  • Alberta (Minister of Infrastructure) v. Nilsson,
    • Canada
    • Court of Appeal (Alberta)
    • 29 d5 Novembro d5 2002
    ...23 O.A.C. 40; 46 D.L.R.(4th) 543; 61 O.R.(2d) 640 (C.A.), refd to. [para. 173]. Bank of America Canada v. Mutual Trust Co. et al. (2002), 287 N.R. 171; 159 O.A.C. 1 (S.C.C.), refd to. [para. 180]. Costello and Dickhoff v. Calgary (City) (1997), 209 A.R. 1; 160 W.A.C. 1; 152 D.L.R.(4th) 453 ......
  • Request a trial to view additional results
254 cases
  • Alberta (Minister of Infrastructure) v. Nilsson,
    • Canada
    • Court of Appeal (Alberta)
    • 29 d5 Novembro d5 2002
    ...23 O.A.C. 40; 46 D.L.R.(4th) 543; 61 O.R.(2d) 640 (C.A.), refd to. [para. 173]. Bank of America Canada v. Mutual Trust Co. et al. (2002), 287 N.R. 171; 159 O.A.C. 1 (S.C.C.), refd to. [para. 180]. Costello and Dickhoff v. Calgary (City) (1997), 209 A.R. 1; 160 W.A.C. 1; 152 D.L.R.(4th) 453 ......
  • Bhasin v. Hrynew et al., (2014) 584 A.R. 6
    • Canada
    • Canada (Federal) Supreme Court (Canada)
    • 12 d3 Fevereiro d3 2014
    ...453 N.R. 273; 416 N.B.R.(2d) 1; 1079 A.P.R. 1; 2014 SCC 12, refd to. [para. 70]. Bank of America Canada v. Mutual Trust Co. et al., [2002] 2 S.C.R. 601; 287 N.R. 171; 159 O.A.C. 1; 2002 SCC 43, refd to. [para. Greenberg v. Montreal Trust Co., Meffert and Melfi (1985), 9 O.A.C. 69; 50 O.R.(2......
  • Bhasin v. Hrynew, [2014] 3 SCR 494
    • Canada
    • Supreme Court (Canada)
    • 13 d4 Novembro d4 2014
    ...S.C.R. 762; A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12, [2014] 1 S.C.R. 177; Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601; Greenberg v. Meffert (1985), 50 O.R. (2d) 755; Shelanu Inc. v. Print Three Franchising Corp. (2003), 64 O.R. (3d) 533; ......
  • Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19
    • Canada
    • Supreme Court (Canada)
    • 24 d5 Julho d5 2020
    ... 2019 BCCA 187 , 25 B.C.L.R. (6th) 268 ; Authentic T‑Shirt Co. ULC v. King, 2016 BCCA 59 ; Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601 ; Kingstreet Investments Ltd. v. New Brunswick (Finance), 2007 SCC 1 , [2007] 1 S.C.R. 3 ; Peel (Regional Municipality......
  • Request a trial to view additional results
15 firm's commentaries
  • Court Of Appeal Summaries (October 25-29, 2021)
    • Canada
    • Mondaq Canada
    • 3 d3 Novembro d3 2021
    ...Toronto Police Widows & Orphans Fund v. Telus Communications Inc. (2008), 44 B.LR. (4th), Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 P.Y. v. Ontario (Attorney General), 2021 ONCA 761 Keywords: Torts, False Arrest, False Imprisonment, Malicious Prosecution, Charter Breaches, Neg......
  • Court Of Appeal Summaries (June 21 ' 25)
    • Canada
    • Mondaq Canada
    • 29 d2 Junho d2 2021
    ...v. Ontario (Transportation), 2018 ONSC 52, Gyimah v. Bank of Nova Scotia, 2013 ONCA 252, Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, Tilden Rent-A-Car Co. v. Clendenning (1978), 18 O.R. (2d) 601 (C.A.), MacQuarie Equipment Finance Ltd. v. 2326695 Ontario Ltd. (Durham Drug Store......
  • Court Of Appeal Summaries (October 25-29, 2021)
    • Canada
    • Mondaq Canada
    • 3 d3 Novembro d3 2021
    ...Toronto Police Widows & Orphans Fund v. Telus Communications Inc. (2008), 44 B.LR. (4th), Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 P.Y. v. Ontario (Attorney General), 2021 ONCA 761 Keywords: Torts, False Arrest, False Imprisonment, Malicious Prosecution, Charter Breaches, Neg......
  • Court Of Appeal Summaries (August 30 ' September 3, 2021)
    • Canada
    • Mondaq Canada
    • 7 d2 Setembro d2 2021
    ...v. EnCana Midstream and Marketing, 2017 ABCA 157 , Kilitzoglou v. Curé, 2018 ONCA 891 , Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, Dasham Carriers Inc. v. Gerlach, 2013 ONCA 707 , Mikisew Cree First Nation v. Canada (Governor General in Council), 2018 SCC 40 , Manitoba Mét......
  • Request a trial to view additional results
20 books & journal articles
  • Rethinking the Approval of Class Counsel's Fees in Ontario Class Actions
    • Canada
    • Irwin Books The Canadian Class Action Review No. 4-1, July 2007
    • 1 d0 Julho d0 2007
    ...have been given to the plaintiff following a straightforward compensatory damages approach. 73 Bank of America Canada v. Mutual Trust, [2002] 2 S.C.R. 601 at para. 30 [Bank of America Canada]. 74 A Quicklaw search indicates that almost five years after Bank of America Canada, ibid., it rema......
  • Class Proceedings, Gains-based Claims, and Deterrence
    • Canada
    • Irwin Books The Canadian Class Action Review No. 4-1, July 2007
    • 1 d0 Julho d0 2007
    ...have been given to the plaintiff following a straightforward compensatory damages approach. 73 Bank of America Canada v. Mutual Trust, [2002] 2 S.C.R. 601 at para. 30 [Bank of America Canada]. 74 A Quicklaw search indicates that almost five years after Bank of America Canada, ibid., it rema......
  • Damages
    • Canada
    • Irwin Books The Law of Contracts. Third Edition Remedies
    • 4 d2 Agosto d2 2020
    ...example, Courts of Justice Act , RSO 1990, c C.43, ss 128–30 [ Courts of Justice Act ]. 23 Bank of America Canada v Mutual Trust Co , [2002] 2 SCR 601. See also Westdeutsche Landesbank Girozentrale v Islington London Borough Council , [1996] AC 669 (HL). THE LAW OF CONTR ACTS 978 decision o......
  • Multiple Defendant Class Actions in Quebec: Recent Developments in the Jurisprudence
    • Canada
    • Irwin Books The Canadian Class Action Review No. 4-1, July 2007
    • 1 d0 Julho d0 2007
    ...have been given to the plaintiff following a straightforward compensatory damages approach. 73 Bank of America Canada v. Mutual Trust, [2002] 2 S.C.R. 601 at para. 30 [Bank of America Canada]. 74 A Quicklaw search indicates that almost five years after Bank of America Canada, ibid., it rema......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT