Raypath Resources Ltd. v. Toronto-Dominion Bank, (1996) 184 A.R. 125 (CA)

• Judge: Harradence, Hunt and Picard, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: April 25, 1996
• Citations: (1996), 184 A.R. 125 (CA)

Raypath Resources Ltd. v. TD Bk. (1996), 184 A.R. 125 (CA);

    122 W.A.C. 125

MLB headnote and full text

Raypath Resources Limited (respondent/plaintiff) v. Toronto-Dominion Bank (appellant/defendant)

(Appeal No. 95-16021)

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

Alberta Court of Appeal

Harradence, Hunt and

Picard, JJ.A.

April 25, 1996.

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, in a judgment reported 170 A.R. 109, allowed the action and assessed damages accordingly. The defendant bank appealed.

The Alberta Court of Appeal dismissed the appeal.

Banks and Banking - Topic 1446

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

Banks and Banking - Topic 1508

Liability of banks to customers - Negli­gence - Re line of credit - [See 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 a 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 - The plaintiff had no opportunity to obtain available alterna­tive financing - The trial judge found the bank liable for negligent misrepresen­tation, negligent provision of banking services and breach of contract - The Alberta Court of Appeal affirmed liability for negligent misrepresentation.

Cases Noticed:

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to. [para. 11].

Fletcher v. Manitoba Public Insurance Corp., [1990] 3 S.C.R. 191; 116 N.R. 1; 71 Man.R.(2d) 81; 44 O.A.C. 81; 74 D.L.R.(4th) 636; 5 C.C.L.T.(2d) 1, refd to. [para. 12].

Counsel:

K. Groves and P.Y. Sugimoto, for the respondent/plaintiff;

D.A. McGillivray and M.E. Killoran, for the appellant/defendant.

This appeal was heard on March 6, 1996, before Harradence, Hunt and Picard, JJ.A., of the Alberta Court of Appeal.

On April 25, 1996, the following memo­randum of judgment was delivered by the Court.