Pawluk et al. v. Bank of Montreal et al., (1994) 154 A.R. 243 (QB)

• Judge: Andrekson, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: May 30, 1994
• Citations: (1994), 154 A.R. 243 (QB)

Pawluk v. Bk. of Mtrl. (1994), 154 A.R. 243 (QB)

MLB headnote and full text

John Pawluk, Banff Investments Ltd., Regional Investments Ltd. and Quinpak Development Ltd. (plaintiffs) v. Bank of Montreal and Fred G. Allen (defendants)

(Action No. 8503-32042)

Indexed As: Pawluk et al. v. Bank of Montreal et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Andrekson, J.

May 30, 1994.

Summary:

The plaintiffs sued a bank and its manager for damages for breach of contract, arising from the bank's failure to advance funds as promised in a commitment letter.

The Alberta Court of Queen's Bench dis­missed the plaintiffs' action and provisionally assessed damages.

Banks and Banking - Topic 704

Duties of banks - Duty to act reasonably - A bank issued a commitment letter to the plaintiffs approving a $4,000,000 loan upon certain conditions - The bank later refused to advance the entire $4,000,000 - The plaintiffs alleged that the bank breached its contract with the plaintiffs by failing to take reasonable care and to use reasonable banking practices in relation to the plaintiffs' accounts - The Alberta Court of Queen's Bench examined the bank's conduct and held that the bank used reasonable banking practices and reason­able care - The court dismissed the plain­tiffs' action - See paragraphs 90 to 106.

Banks and Banking - Topic 5124

Loans - Agreement to loan - What con­stitutes a binding agreement to loan by a bank - Letter of commitment - The Alberta Court of Queen's Bench stated that "... a commitment letter is merely a con­tract between a bank and its customer. As with any contract, a commitment letter must encompass all of the essential terms constituting the parties' agreement" - See paragraph 56.

Banks and Banking - Topic 5124

Loans - Agreement to loan - What con­stitutes a binding agreement to loan by a bank - Letter of commitment - A bank issued a commitment letter to the plaintiffs approving a $4,000,000 loan upon certain conditions - The bank later refused to advance the entire $4,000,000 - The plaintiffs sued the bank for damages for breach of contract - The plaintiffs argued that the letter was a valid and binding contract and since the bank did not reserve the express ability to withhold advances it could not do so - The Alberta Court of Queen's Bench held that there was more to the parties' agreement than just the letter of commitment - The bank's failure to make advances was not a breach of the overall agreement between the parties - The court dismissed the plaintiffs' action - See para­graphs 1 to 89.

Contracts - Topic 3523

Performance or breach - Breach - What constitutes - [See Banks and Banking - Topic 704 and second Banks and Bank­ing - Topic 5124 ].

Contracts - Topic 4023

Remedies for breach - Damages - Extent of liability - Losses attributable to breach - A bank issued a commitment letter to the plaintiffs approving a $4,000,000 loan upon certain conditions - The bank later refused to advance the entire $4,000,000 - The plaintiffs sued the bank and its man­ager for damages for breach of contract - The Alberta Court of Queen's Bench dis­missed the plaintiffs' action, but provisionally assessed damages - The court stated that the only damages claimed by the plaintiffs which were not too remote would be the additional cost of borrowing $4,000,000 from another lender - See paragraphs 107 to 139.

Damages - Topic 558

Limits of compensatory damages - Re­moteness - Contracts - Damages within reasonable contemplation of parties - [See Contracts - Topic 4023 ].

Evidence - Topic 6200

Parol evidence rule - General - The Alberta Court of Queen's Bench reviewed the parol evidence rule - See paragraphs 67, 68.

Evidence - Topic 6202

Parol evidence rule - Exceptions - Gen­eral - The plaintiffs sued a bank for dam­ages for breach of contract arising from the bank's failure to advance funds pursu­ant to a commitment letter - The plaintiffs argued that the letter was a valid and binding contract requiring the bank to make advances - The Alberta Court of Queen's Bench held that the letter was not intended to integrate the entire transaction between the parties - Therefore, the parol evidence rule was inapplicable and that part of the agreement which was oral could be proven by parol evidence - See paragraphs 61 to 72.

Cases Noticed:

First City Investments Ltd. v. Fraser Arms Hotel Ltd., [1979] 6 W.W.R. 125 (B.C.C.A.), refd to. [para. 56].

Dot Developments Ltd. v. Fowler (1980), 118 D.L.R.(3d) 371 (B.C.S.C.), refd to. [para. 57].

Two Hills Rental Properties Ltd. and Bah­nuik v. First City Trust Co. (1982), 34 A.R. 516; 18 Alta. L.R.(2d) 82 (Q.B.), refd to. [para. 59].

Accord Holdings Ltd. v. Excelsior Life Insurance Co. (1982), 44 A.R. 368 (Q.B.), varied (1985), 62 A.R. 234 (C.A.), refd to. [para. 59].

Toronto-Dominion Bank v. Griffiths (1978), 18 B.C.L.R.(2d) 117 (B.C.C.A.), refd to. [para. 65].

Pioneer Trust Co. v. 220263 Alberta Ltd. et al., [1989] 4 W.W.R. 154; 94 A.R. 86 (Q.B.), refd to. [para. 65].

Hilton v. Westminster Bank Ltd. (1926), 135 L.T. 358 (C.A.), refd to. [para. 91].

Selangor United Rubber Estates Ltd. v. Cradock (No. 3), [1968] 2 All E.R. 1073 (Ch.), refd to. [para. 91].

Groves-Raffin Construction Ltd. v. Bank of Nova Scotia (1975), 64 D.L.R.(3d) 78 (B.C.C.A.), refd to. [para. 91].

K.M.C. Co. v. Irving Trust Co. (1985), 757 F.2d 752 (6th Cir.), refd to. [para. 94].

Ronald Elwyn Lister Ltd. et al. v. Dunlop Canada Ltd., [1982] 1 S.C.R. 726; 42 N.R. 181, refd to. [para. 94].

Hadley v. Baxendale (1854), 9 Ex. 341, refd to. [para. 118].

McCain Produce Co. et al. v. Canadian Pacific Ltd. (1980), 30 N.B.R.(2d) 476; 70 A.P.R. 476 (C.A.), refd to. [para. 125].

Victoria Laundry (Windsor) v. Newman Industries Coulson & Co. (third parties), [1949] 2 K.B. 528; [1949] 1 All E.R. 997 (C.A.), refd to. [para. 126].

Edmonton Flying Club et al. v. Northward Aviation Ltd. et al. (1979), 17 A.R. 507 (C.A.), refd to. [para. 131].

Calmonton Investments Ltd. v. Tangye (1988), 87 A.R. 22 (C.A.), refd to. [para. 134].

Foss v. Harbottle (1843), 67 E.R. 189 (U.K.), refd to. [para. 137].

Authors and Works Noticed:

Cheshire, Fifoot and Furmston, Law of Contract (12th Ed.), pp. 123, 124 [para. 67].

Crawford and Falconbridge, Banking and Bills of Exchange (8th Ed. 1986), pp. 746, 747 [para. 90].

McGregor on Damages (15th Ed. 1988), pp. 71 [para. 119]; 143 [para. 117].

Sopinka and Lederman, The Law of Evi­dence in Civil Cases (1974), pp. 268, 269 [para. 68].

Waddams, The Law of Contracts (2nd Ed. 1984), pp. 109, 110 [para. 74].

Counsel:

G.A. Verville, Q.C., and D.L. Picco, for the plaintiffs;

M.A. Putnam, Q.C., and M.F. Naber-Sykes, for the defendants.

This case was heard before Andrekson, J., of the Alberta Court of Queen's Bench, who delivered the following decision on May 30, 1994.