Raypath Resources Ltd. v. Toronto-Dominion Bank, (1995) 170 A.R. 109 (QB)

• Judge: Moore, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: May 04, 1995
• Citations: (1995), 170 A.R. 109 (QB)

Raypath Resources Ltd. v. TD Bk. (1995), 170 A.R. 109 (QB)

MLB headnote and full text

Raypath Resources Ltd. (plaintiff) v. Toronto-Dominion Bank (defendant)

(Action No. 8701-14145)

Indexed As: Raypath Resources Ltd. v. Toronto-Dominion Bank

Alberta Court of Queen's Bench

Judicial District of Calgary

Moore, J.

May 4, 1995.

Summary:

The plaintiff's $422,000 cheque to a sup­plier was returned "N.S.F." by the plaintiff's bank. The supplier immediately placed the plaintiff on a cash-only basis, which ulti­mately prevented the plaintiff from carrying on its day-to-day business, forcing it to file an assignment in bankruptcy. The plaintiff remained in bankruptcy for 15.5 months until its proposal to its creditors was accepted. The plaintiff sued the defendant bank for damages for negligent misrepresen­tation, negligent provision of banking ser­vices and breach of contract.

The Alberta Court of Queen's Bench allowed the action and assessed damages accordingly. The court adjourned the trial to deal with the issues of interest and costs.

Banks and Banking - Topic 704

Duties of banks - Duty to act reasonably - The Alberta Court of Queen's Bench stated that a bank had "a duty to perform banking services with the reasonable care, skill and knowledge of the ordinary banker in simi­lar circumstances." - A bank had a duty to act in a prudent manner and with reason­able care in light of normal industry prac­tice - The duty could be characterized as an implied contractual term, but was also a duty of care based on tort principles - See paragraphs 80, 84.

Banks and Banking - Topic 1446

Liability of banks to customers - Duties of bank - Duty to inform - [See first Fraud and Misrepresentation - Topic 2508 ].

Banks and Banking - Topic 1508

Liability of banks to customers - Negli­gence - Re line of credit - [See first Fraud and Misrepresentation - Topic 2508 ].

Fraud and Misrepresentation - Topic 2508

Misrepresentation - Negligent misrepre­sentation - The plaintiff had a $300,000 line of credit with its bank - The plaintiff sought authorization for a $422,000 cheque to its supplier - A bank employee advised that he would check into it and get back to the plaintiff if there was a problem - He never did - The plaintiff, believing there was no problem, issued the cheque - The bank dishonoured the cheque after the plaintiff's principal refused an ultimatum to personally guarantee all of the plaintiff's debt, not just the overage as he was instructed to do by a higher authority - The supplier immediately put the plaintiff on a cash-only basis - The plaintiff ulti­mately made an assignment in bankruptcy - The bank also, without notice, termi­nated the line of credit - The bank never advised the plaintiff that it reduced the line of credit to $200,000 or that it considered the plaintiff's financial position precarious - The plaintiff had no opportunity to obtain available alternative financing - The Alberta Court of Queen's Bench held that the plaintiff was solvent when the cheque was dishonoured and the bank's improper conduct caused its loss - The bank was liable for negligent misrepresen­tation, negligent provision of banking services and breach of contract - See paragraphs 1 to 121.

Fraud and Misrepresentation - Topic 2508

Misrepresentation - Negligent misrepre­sentation - The Alberta Court of Queen's Bench stated that the five general require­ments for a successful claim for negligent misrepresentation were "(1) there must be a duty of care based on a 'special relation­ship' between the representor and the representee; (2) the representation in ques­tion must be untrue, inaccurate, or mis­leading; (3) the representor must have acted negligently in making the represen­tation; (4) the representee must have relied, in a reasonable manner, on the negligent misrepresentation; (5) the reliance must have been detrimental to the representee in the sense that damages resulted." - See paragraph 77.

Cases Noticed:

Hedley Byrne & Co. v. Heller & Partners Ltd., [1964] A.C. 465 (H.L.), refd to. [para. 75].

BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241, refd to. [para. 76].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 77].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109; 37 C.C.L.T. 117; 42 R.P.R. 161; 31 D.L.R.(4th) 481; 34 B.L.R. 187, refd to. [para. 79].

Royal Bank v. Fleming, [1933] 3 D.L.R. 353 (Ont. C.A.), refd to. [para. 81].

Lloyds Bank Canada v. Alberta Opportu­nity Co. (1989), 101 A.R. 294 (Q.B.), refd to. [para. 81].

239199 Alberta Ltd. v. Patel et al. (1992), 126 A.R. 308 (Q.B.), refd to. [para. 83].

Law Society of Alberta and Ainscough Estate v. Canadian Imperial Bank of Commerce and Bank of Nova Scotia (1989), 101 A.R. 374 (Q.B.), refd to. [para. 83].

Claiborne Industries Ltd. v. National Bank of Canada (1986), 28 D.L.R.(4th) 695 (Ont. H.C.), refd to. [para. 83].

Fletcher v. Manitoba Public Insurance Co., [1990] 3 S.C.R. 191; 116 N.R. 1; 71 Man.R.(2d) 81; 44 O.A.C. 81; 5 C.C.L.T.(2d) 1, refd to. [para. 86].

Banque Financière de la Cité S.A. v. Westgate Insurance Co., [1989] 2 All E.R. 952 (C.A.), refd to. [para. 87].

Mason (V.K.) Construction Ltd. v. Bank of Nova Scotia and Courtot Investments Ltd., [1985] 1 S.C.R. 271; 58 N.R. 195; 8 O.A.C. 381; 16 D.L.R.(4th) 598, refd to. [para. 87].

Opron Construction Co. v. Alberta (1994), 151 A.R. 241 (Q.B.), refd to. [para. 90].

Bank of Nova Scotia v. Dunphy Leasing Enterprises Ltd. (1991), 120 A.R. 241; 8 W.A.C. 241 (C.A.), affd. [1994] 1 S.C.R. 552; 166 N.R. 1; 149 A.R. 256; 63 W.A.C. 256, refd to. [para. 116 and Schedule A].

Bradshaw Construction Ltd. v. Bank of Nova Scotia, [1993] 1 W.W.R. 596; 16 B.C.A.C. 62; 28 W.A.C. 62 (C.A.), refd to. [Schedule A].

Gold Star Equity Ltd. et al. v. Toronto-Dominion Bank (1991), 113 A.R. 18 (Q.B.), refd to. [Schedule A].

Hadley v. Baxendale (1854), 9 Exch. 341; 156 E.R. 145, refd to. [Schedule A].

Haggart Construction Ltd. et al. v. Cana­dian Imperial Bank of Commerce et al. (1993), 141 A.R. 281; 46 W.A.C. 281 (C.A.), refd to. [Schedule A].

Kavcar Investments Ltd. et al. v. Aetna Financial Services Ltd. and Coopers & Lybrand (1989), 35 O.A.C. 305; 62 D.L.R.(4th) 277 (C.A.), refd to. [Sched­ule A].

Lister (Ronald Elwyn) Ltd., Lister and Lister v. Dunlop Canada Ltd., [1982] 1 S.C.R. 726; 42 N.R. 181, refd to. [Schedule A].

Mercantile Bank of Canada v. Nelco Corp. Ltd. (1982), 47 C.B.R.(N.S.) 165 (Alta. Q.B.), refd to. [Schedule A].

Mister Broadloom Corp. (1968) Ltd. v. Bank of Montreal and Clarkson Co. (1983), 1 O.A.C. 52 (C.A.), leave to appeal denied (1984), 55 N.R. 160; 3 O.A.C. 320 (S.C.C.), refd to. [Sched­ule A].

Petrochem Electric et al. v. Bank of British Columbia et al. (1986), 77 A.R. 155 (Q.B.), refd to. [Schedule A].

Redhawk Drilling Ltd. v. Toronto-Domin­ion Bank (1986), 77 A.R. 49 (Q.B.), refd to. [Schedule A].

Royal Bank of Canada v. Got (W.) & Associates Electric Ltd. et al. (1994), 150 A.R. 93 (Q.B.), refd to. [Schedule A].

Royal Bank of Canada v. Pace Machinery Ltd. et al. (1991), 123 A.R. 181 (Q.B.), refd to. [Schedule A].

Inter-City Express Ltd. v. Toronto-Dominion Bank (1976), 66 D.L.R.(3d) 754 (B.C.S.C.), refd to. [Schedule A].

Thermo King Corp. v. Provincial Bank of Canada (1981), 34 O.R.(2d) 369 (C.A.), refd to. [Schedule A].

Barclay Construction Corp. v. Bank of Montreal (1989), 41 B.C.L.R.(2d) 239 (C.A.), refd to. [Schedule A].

Sterling Rubber Ltd. v. Canadian Imperial Bank of Commerce, [1991] O.J. No. 1022 (Gen. Div.), refd to. [Schedule A].

Alsack Farm & Ranch Supply Ltd. v. Texaco Canada Inc. (1989), 73 Sask.R. 154; 74 C.B.R.(N.S.) 73 (Q.B.), refd to. [Schedule A].

Birla Industries Inc. v. Toronto-Dominion Bank (1984), 25 A.C.W.S.(2d) 1044 (Ont. H.C.), refd to. [Schedule A].

Canadian Imperial Bank of Commerce v. Quesnel Machinery Ltd. (1985), 62 C.B.R. 91 (B.C.S.C.), refd to. [Schedule A].

CIP Inc. v. Toronto-Dominion Bank (1988), 55 D.L.R.(4th) 308 (B.C.C.A.), refd to. [Schedule A].

Foldy v. D'Amico (1979), 25 O.R.(2d) 485 (H.C.), refd to. [Schedule A].

Cripps (R.A.) & Son v. Wickenden: Cripps (Pharmaceuticals) Ltd. v. Wickenden, [1973] 1 W.L.R. 944; [1973] 2 All E.R. 606 (Ch. D.), refd to. [Schedule A].

Royal Bank v. Cal Glass Ltd. (1979), 18 B.C.L.R. 55; 9 B.L.R. 1 (S.C.), affd. (1980), 22 B.C.L.R. 328 (C.A.), refd to. [Schedule A].

Wenngatz Construction and Holdings Ltd. v. Canadian Surety Co. (1989), 73 C.B.R.(N.S.) 314 (B.C.S.C.), refd to. [Schedule A].

Whonnock Industries Ltd. v. National Bank of Canada (1986), 33 B.L.R. 218 (S.C.), revd. (1987), 16 B.C.L.R.(2d) 320 (C.A.), refd to. [Schedule A].

ABC Color & Sound Ltd. et al. v. Royal Bank of Canada (1991), 117 A.R. 271; 2 W.A.C. 271; 81 Alta. L.R.(2d) 289 (C.A.), refd to. [Schedule A].

Authors and Works Noticed:

Bernstein, R., Economic Loss (1993), pp. 27 to 58, 375 to 448 [Schedule A].

Canadian Encyclopedic Digest (West.)(3rd Ed. 1993), vol. 3, pp. 371 to 407 [Sched­ule A].

Crawford and Falconbridge, Banking and Bills of Exchange (8th Ed. 1986), vol. 1, pp. 745 to 749 [para. 81].

Feldthusen, B., Economic Negligence: The Recovery of Pure Economic Loss (2nd Ed. 1989), pp. 83 to 96, 130 to 149 [Schedule A].

McGregor, H., McGregor on Damages (5th Ed. 1987), p. 143 [Schedule A].

Stuesser, Lee, Case Comment: A Confus­ing Case of Contradictions, 5 C.C.L.T.(2d) 64, p. 66 [para. 88].

Counsel:

K.F. Groves, for the plaintiff;

D.A. McGillivray, for the defendant.

This action was heard before Moore, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the fol­lowing judgment on May 4, 1995.