Rodaro v. Royal Bk., [2000] O.T.C. 85 (SupCt)

• Judge: Spence, J.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: September 14, 1998
• Jurisdiction: Ontario
• Citations: [2000] O.T.C. 85 (SupCt)

Rodaro v. Royal Bk., [2000] O.T.C. 85 (SupCt)

MLB headnote and full text

Temp. Cite: [2000] O.T.C. TBEd. FE.127

Frank Rodaro, Franro Engineering (Ontario) Limited, Heritage Glen North Limited and Heritage Glen West Limited (plaintiffs) v. Royal Bank of Canada, Barbican Properties Inc., Paul Dinner and Norman Tower (defendants)

Barbican Properties Inc. (plaintiff) v. 740484 Ontario Limited, Franro Engineering (Ontario) Limited, Kempenfeldt Heights Developments Limited, Kakwa Estates Limited, Quantus Investments Limited, Heritage Glen North Limited and Heritage Glen West Limited, Frank Rodaro, Canholme Holdings Limited, Kingsgate Homes Limited, The Kingswood Community Corp., High Loch Investments Limited, Goodman & Carr and Royal Bank of Canada (defendants)

740484 Ontario Limited, Franro Engineering (Ontario) Limited, Kempenfeldt Heights Developments Limited, Kakwa Estates Limited, Quantus Investments Limited, Frank Rodaro, Canholme Holdings Limited, Kingsgate Homes Limited, The Kingswood Community Corp., High Loch Investments Limited, and Royal Bank of Canada (plaintiffs) v. Jerome Ublansky, Paul Sullivan, Saul Shulman, Goodman & Carr, Londamir Holdings Limited and Jentin Investments Inc. (defendants)

(Court File Nos. 92-CQ-72699, 91 CQ-7273; Commercial List Court File Nos. B19/93, 98-CL-2819)

Indexed As: Rodaro et al. v. Royal Bank of Canada et al.

Court of Ontario

Superior Court of Justice

Spence, J.

February 8, 2000.

Summary:

Frank Rodaro and his companies claimed against the defendant Bank and others for damages alleged to have resulted from the Bank's withdrawal of its financing support for the plaintiff in connection with a large real estate development (the project). The Bank assigned its interest in the debt and security to the defendant Barbican, in which it held shares. Barbican sold the lands under the power of sale contained in the security instruments and claimed for the amount outstanding under the loans. Rodaro and others also claimed against their former lawyers, alleging breach of their duties in respect of the same matters. The plaintiffs' principal claims were 1) that the Bank committed to provide long term continuing financial support that would see the project through to its conclusion in 10 to 12 years and that it failed to honour that commitment (the "umbrella agreement"), and 2) the Bank carried out a plan designed to appropriate the benefit of the project for itself through the alleged assignment to Barbican.

The Ontario Superior Court held that there was no umbrella agreement, but that the Bank had breached its duty of confidentiality to the plaintiffs. The court held that both the Bank and Barbican were liable for damages for the breach. The court dismissed the plaintiffs' claims against their former lawyers.

Banks and Banking - Topic 705

Duties of banks - General - Duty of confidentiality - See paragraphs 791 to 916.

Banks and Banking - Topic 744

Duties of banks - Fiduciary relationships - Debtor's reliance on bank - See paragraphs 220 to 312.

Banks and Banking - Topic 746

Duties of banks - Fiduciary relationships - Power and control over debtor - See paragraphs 220 to 312.

Banks and Banking - Topic 1445

Liability of banks to customers - Duties of bank - Duty of confidentiality - See paragraphs 791 to 916 and 1187 to 1200.

Barristers and Solicitors - Topic 1604

Relationship with client - Conflict of interest - Acting for both sides - See paragraphs 1112 to 1138 and 1141 to 1157.

Barristers and Solicitors - Topic 1609

Relationship with client - Conflict of interest - Resulting from lawyer's self-interest - See paragraphs 1158 to 1186.

Contracts - Topic 1205

Formation of contract - Offer - What constitutes an offer - See paragraphs 122 to 219.

Contracts - Topic 1484

Formation of contract - Collateral contracts - What constitutes a collateral contract - See paragraphs 581 to 625.

Contracts - Topic 2872

Consideration - What constitutes consideration - Exchange of promises - See paragraph 174.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - See paragraphs 457 to 790.

Contracts - Topic 3524

Performance or breach - Breach - Bad faith - See paragraph 638.

Contracts - Topic 6806

Assignment - General - Without notice or consent - See paragraphs 849 to 892.

Contracts - Topic 9915

Promissory estoppel - Where applicable - Requirement of promise - See paragraphs 688 to 703.

Damages - Topic 1309.1

Exemplary or punitive damages - Breach of confidence or fiduciary duty - See paragraphs 1187 to 1200.

Equity - Topic 3607

Fiduciary or confidential relationships - General principles - Relationships which are not fiduciary - See paragraphs 220 to 312.

Equity - Topic 3902

Fiduciary or confidential relationships - Breach of confidence - What constitutes - See paragraphs 791 to 916.

Equity - Topic 3905

Fiduciary or confidential relationships - Breach of confidence - Remedies - Damages - See paragraphs 993 to 1108 and 1187 to 1200.

Equity - Topic 3908

Fiduciary or confidential relationships - Breach of confidence - Duty of third parties - See paragraph 1203.

Evidence - Topic 2401

Special modes of proof - Presumptions - Specific presumptions - Inference from failure to call or adduce available evidence - See paragraphs 414 and 416.

Fraud and Misrepresentation - Topic 2750

Misrepresentation - Negligent advice - Inducing contractual relations - See paragraphs 314 to 456.

Torts - Topic 5703

Conspiracy - General - Elements - See paragraphs 938 to 974.

Torts - Topic 5706

Conspiracy - General - Conspiracy - What constitutes - See paragraphs 938 to 974.

Cases Noticed:

Hunt River Camps/Air Northland Ltd. v. Canamera Geological Ltd. (1998), 168 Nfld. & P.E.I.R. 207; 517 A.P.R. 207 (Nfld. C.A.), refd to. [para. 144].

Bank of Montreal v. Wilder (1983), 149 D.L.R.(3d) 193 (B.C.C.A.), affd. [1986] 2 S.C.R. 551; 70 N.R. 341, refd to. [paras. 146, 149].

Toronto-Dominion Bank v. Griffiths, [1985] B.C.J. No. 1304, refd to. [para. 150].

Standard Investments Ltd., Brentwood Realty Ltd., Cohen and Ellen v. Canadian Imperial Bank of Commerce (1985), 11 O.A.C. 318; 52 O.R.(2d) 473 (C.A.), dist. [para. 222].

Hodgkinson v. Simms et al., [1994] 3 S.C.R. 377; 171 N.R. 245; 49 B.C.A.C. 1; 80 W.A.C. 1, refd to. [para. 223].

Dolton v. Capital Federal Savings and Loan Association (1982), 642 P.2d 21 (Colo. App.), refd to. [para. 260].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14, refd to. [para. 264].

Lloyds Bank Ltd. v. Bundy, [1974] 3 All E.R. 757 (C.A.), dist. [para. 279].

MacKenzie v. Bank of Montreal - see McKenzie v. Bank of Montreal.

McKenzie v. Bank of Montreal (1975), 7 O.R.(2d) 521 (H.C.), affd. (1976), 12 O.R.(2d) 719 (C.A.), dist. [para. 280].

Royal Bank of Canada v. Hinds (1978), 20 O.R.(2d) 613 (H.C.), dist. [para. 280].

McBean v. Bank of Nova Scotia (1981), 15 B.L.R. 296 (Ont. H.C.), affd. 17 A.C.W.S.(2d) 154 (Ont. C.A.), dist. [para. 281].

Hayward v. Bank of Nova Scotia and Dunnell (1985), 10 O.A.C. 391; 51 O.R.(2d) 193 (C.A.), dist. [para. 281].

Guertin v. Royal Bank of Canada (1983), 43 O.R.(2d) 363 (H.C.), affd. (1984), 47 O.R.(2d) 799 (C.A.), dist. [para. 282].

Streamside Engineering and Development Ltd. v. Canadian Imperial Bank of Commerce (1990), 85 Nfld. & P.E.I.R. 220; 266 A.P.R. 220 (Nfld. T.D.), refd to. [para. 284].

Royal Bank of Canada v. Hussain et al. (1997), 67 O.T.C. 170; 37 O.R.(3d) 85 (Gen. Div.), refd to. [para. 285].

Bank of Montreal v. Minaki International Resort Corp. (1997), 46 O.T.C. 101 (Gen. Div.), refd to. [para. 286].

Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1; 99 D.L.R.(4th) 626, refd to. [para. 315].

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. 331].

Datile Financial Corp. v. Royal Trust Corp. of Canada (1991), 5 O.R.(3d) 358 (Gen. Div.), refd to. [para. 349].

Bossé v. Mastercraft Group Inc. et al., [1994] O.J. No. 941 (Gen. Div.), affd. (1995), 80 O.A.C. 185; 123 D.L.R.(4th) 161 (C.A.), refd to. [para. 349].

Foster Advertising Ltd. v. Keenberg and Manitoba (1987), 45 Man.R.(2d) 1; 35 D.L.R.(4th) 521 (C.A.), refd to. [para. 349].

Andronyk v. Williams (1985), 36 Man.R.(2d) 161; 21 D.L.R.(4th) 557 (C.A.), refd to. [para. 349].

Gateway Realty Ltd. v. Arton Holdings Ltd. and LaHave Developments Ltd. (1991), 106 N.S.R.(2d) 180; 288 A.P.R. 180 (T.D.), affd. (1992), 112 N.S.R.(2d) 180; 307 A.P.R. 180 (C.A.), refd to. [para. 442].

GATX Corp. et al. v. Hawker Siddeley Canada Inc. et al. (1996), 1 O.T.C. 322; 27 B.L.R.(2d) 251 (Gen. Div.), refd to. [para. 442].

National Trust Co. v. Saks et al., [1994] O.J. No. 2488 (Gen. Div.), varied [1998] O.A.C. Uned. 303 (C.A.), refd to. [para. 484].

Abdool et al. v. Somerset Place Developments of Georgetown Ltd. et al. (1992), 58 O.A.C. 176; 10 O.R.(3d) 120 (C.A.), refd to. [para. 633].

Banque Nationale du Canada v. Soucisse, Groulx and Robitaille, [1981] 2 S.C.R. 339; 43 N.R. 283, refd to. [para. 633].

Houle v. Banque Nationale du Canada, [1990] 3 S.C.R. 122; 114 N.R. 161; 35 Q.A.C. 1; 74 D.L.R.(4th) 577, refd to. [para. 633].

LesMesurier v. Andrus (1986), 12 O.A.C. 299; 54 O.R.(2d) 1; 25 D.L.R.(4th) 424 (C.A.), leave to appeal refused (1986), 74 N.R. 239; 21 O.A.C. 239 (S.C.C.), refd to. [para. 633].

Mesa Operating Limited Partnership v. Amoco Canada Resources Ltd. (1994), 149 A.R. 187; 63 W.A.C. 187; 13 B.L.R.(2d) 310 (C.A.), affing. (1992), 129 A.R. 177 (Q.B.), leave to appeal refused (1994), 179 N.R. 80; 162 A.R. 318; 83 W.A.C. 318; 15 B.L.R.(2d) 284 (S.C.C.), refd to. [para. 656].

MDS Health Group Ltd. v. King Street Medical Arts Centre Ltd. (1994), 12 B.L.R.(2d) 209 (Ont. Gen. Div.), refd to. [para. 656].

Greenwood v. Martin's Bank Ltd., [1932] All E.R. Rep. 318 (H.L.), refd to. [para. 690].

Central London Property Trust v. High Trees House Ltd., [1956] 1 All E.R. 256 (K.B.), refd to. [para. 691].

Hughes v. Metropolitan Railway Co., [1877] All E.R. Rep. 187 (H.L.), refd to. [para. 691].

Pierce v. Empey, [1939] 4 D.L.R. 672 (S.C.C.), refd to. [para. 691].

Cohnstaedt v. University of Regina (1989), 93 N.R. 169; 75 Sask.R. 211; 57 D.L.R.(4th) 461 (S.C.C.), refd to. [para. 761].

Saltman Engineering Co. v. Campbell Engineering Co., [1963] 3 All E.R. 413, refd to. [para. 797].

Seager v. Copydex Ltd., [1967] 2 All E.R. 415 (C.A.), refd to. [para. 798].

Terrapin Ltd. v. Builders Supply Co. (Hayes) Ltd., [1967] R.P.C. 375, affd. [1960] R.P.C. 128 (C.A.), refd to. [para. 798].

Tournier v. National Provincial & Union Bank of England, [1924] 1 K.B. 461 (C.A.), refd to. [para. 800].

Murano et al. v. Bank of Montreal et al. (1998), 111 O.A.C. 242; 41 B.L.R.(2d) 10 (C.A.), refd to. [para. 800].

Cadbury Schweppes Inc. et al. v. FBI Foods Ltd. et al., [1994] 8 W.W.R. 727, additional reasons [1995] 4 W.W.R. 104 (S.C.), revd. [1996] 9 W.W.R. 609; 79 B.C.A.C. 56; 129 W.A.C. 56, additional reasons [1996] 10 W.W.R. 752; 81 B.C.A.C. 237; 132 W.A.C. 237, additional reasons [1997] 2 W.W.R. 149; 84 B.C.A.C. 143; 137 W.A.C. 143 (C.A.), revd. (1999), 235 N.R. 30; 117 B.C.A.C. 161; 191 W.A.C. 161; 167 D.L.R.(4th) 577 (S.C.C.), refd to. [para. 802].

Canadian Imperial Bank of Commerce v. Sayani et al., [1994] 2 W.W.R. 260; 33 B.C.A.C. 85; 54 W.A.C. 85 (C.A.), leave to appeal refused [1994] 3 W.W.R. lxvi; 171 N.R. 244; 51 B.C.A.C. 306; 84 W.A.C. 306 (S.C.C.), refd to. [para. 805].

Montgomery v. Ryan (1908), 16 O.L.R. 75 (C.A.), refd to. [para. 807].

Polar Heating Ltd. et al. v. Banque Nationale de Paris (Canada) (1991), 114 A.R. 299; 7 C.B.R.(3d) 45 (Q.B.), refd to. [para. 809].

Pharand Ski Corp. v. Alberta (1991), 122 A.R. 395; 37 C.P.R.(3d) 532 (Q.B.), refd to. [para. 810].

Stewart (Walter) Realty Ltd. v. Traber et al., [1995] 9 W.W.R. 593; 174 A.R. 45; 102 W.A.C. 45 (C.A.), refd to. [para. 810].

655 Developments Ltd. v. Dawe (Chester) Ltd. et al. (1992), 97 Nfld. & P.E.I.R. 247; 308 A.P.R. 247; 42 C.P.R.(3d) 500 (Nfld. T.D.), refd to. [para. 812].

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488, refd to. [para. 856].

Arctic Red Resources Corp. v. International Shasta Resources Ltd., [1986] B.C.J. No. 646 (C.A.), refd to. [para. 861].

Tru-Wall Group Ltd. v. Stadium Corp. of Ontario Ltd., [1995] O.J. No. 2610 (Gen. Div.), refd to. [para. 864].

Toronto-Dominion Bank v. Block Brothers Contractors Ltd. (1980), 118 D.L.R.(3d) 311 (Alta. Q.B.), refd to. [para. 868].

Air Transit Ltd. et al. v. Innotech Aviation of Nfld. Ltd. et al. (1989), 78 Nfld. & P.E.I.R. 24; 244 A.P.R. 24 (Nfld. T.D.), refd to. [para. 873].

National Trust Co. v. Miller, [1977] 1 W.W.R. 481 (Man. Q.B.), refd to. [para. 873].

Kemp v. Baerselman, [1906] 2 K.B. 604 (C.A.), refd to. [para. 874].

Linden Gardens Trust Ltd. v. Wanesta Sludge Disposal Ltd. - see Linden Gardens Trusts Ltd. v. Lenesta Sludge Disposals Ltd. et al.; St. Martin's Property Corp. et al. v. McAlpine (Sir Robert) & Sons Ltd.

Linden Gardens Trusts Ltd. v. Lenesta Sludge Disposals Ltd. et al.; St. Martin's Property Corp. et al. v. McAlpine (Sir Robert) & Sons Ltd., [1993] 3 All E.R. 417; 161 N.R. 208 (H.L.), refd to. [para. 876].

Cawood et al. v. Yablonski (1997), 152 Sask.R. 54; 140 W.A.C. 54; 143 D.L.R.(4th) 65 (C.A.), refd to. [para. 876].

Collins v. Haliburton, Kawartha Pine Ridge District Health Unit (No. 2), [1972] 3 O.R. 643 (H.C.), refd to. [para. 876].

Nashua Photo Ltd. v. Marchman et al. (1992), 89 D.L.R.(4th) 592 (Ont. Gen. Div.), refd to. [para. 882].

Royal Bank of Canada v. Brattberg, [1993] 8 W.W.R. 139; 143 A.R. 131 (Q.B.), refd to. [para. 899].

Royal Bank of Canada v. Vincenzi, [1994] B.C.J. No. 772 (S.C.), refd to. [para. 899].

Gold v. Rosenberg et al. (1995), 86 O.A.C. 116; 129 D.L.R.(4th) 152 (C.A.), affd. (1997), 219 N.R. 93; 104 O.A.C. 1; 152 D.L.R.(4th) 385 (S.C.C.), refd to. [para. 918].

Air Canada v. M & L Travel Ltd., Martin and Vaillant, [1993] 3 S.C.R. 787; 159 N.R. 1; 67 O.A.C. 1, refd to. [para. 919].

Citadel General Assurance Co. et al. v. Lloyds Bank Canada et al. (1997), 219 N.R. 323; 206 A.R. 321; 156 W.A.C. 321; 152 D.L.R.(4th) 411 (S.C.C.), refd to. [para. 924].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321; 4 C.C.L.T.(2d) 1; 43 C.P.C.(2d) 105; 49 B.C.L.R.(2d) 273; 74 D.L.R.(4th) 321, refd to. [para. 938].

Levy-Russell Ltd. v. Tecmotiv Inc. (1994), 13 B.L.R.(2d) 1 (Ont. Gen. Div.), refd to. [para. 940].

Canada Cement LaFarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191; [1983] 6 W.W.R. 385; 21 B.L.R. 254; 24 C.C.L.T. 111; 72 C.P.R.(2d) 1; 145 D.L.R.(3d) 385, refd to. [para. 947].

Claiborne Industries Ltd. et al. v. National Bank of Canada et al. (1989), 34 O.A.C. 241; 69 O.R.(2d) 65 (C.A.), refd to. [para. 948].

Positive Seal Dampers Inc. v. M & I Heat Transfer Products Ltd. (1991), 2 O.R.(3d) 225 (Gen. Div.), affd. [1997] O.A.C. Uned. 201; 73 C.P.R.(3d) 319 (C.A.), refd to. [para. 950].

Lonrho Ltd. v. Shell Petroleum Co., [1981] 2 All E.R. 456 (H.L.), refd to. [para. 950].

Sweeney v. Coote, [1907] A.C. 221 (H.L.), refd to. [para. 955].

Nicholls v. Richmond et al., [1984] 3 W.W.R. 719 (B.C.S.C.), refd to. [para. 955].

Mooney v. Orr, [1995] B.C.J. No. 1094 (S.C.), refd to. [para. 955].

Soulos v. Korkontzilas et al., [1997] 2 S.C.R. 217; 212 N.R. 1; 100 O.A.C. 241, refd to. [para. 982].

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, refd to. [para. 1112].

Davey v. Woolley, Hames, Dale & Dingwall (1982), 35 O.R.(2d) 599 (C.A.), refd to. [para. 1113].

Higgins v. Naugler et al. (1994), 133 N.S.R.(2d) 167; 380 A.P.R. 167 (S.C.), affd. (1995), 142 N.S.R.(2d) 104; 407 A.P.R. 104 (C.A.), refd to. [para. 1115].

Harela et al. v. Powell et al. (1998), 73 O.T.C. 260; 163 D.L.R.(4th) 365 (Gen. Div.), refd to. [para. 1116].

Credit Foncier (Canada) v. Grayson, Rushford, Cooper, Nidesh and Arendt (1987), 61 Sask.R. 212 (C.A.), refd to. [para. 1116].

Morton v. Harper Grey Easton (1995), 8 B.C.L.R.(3d) 53 (S.C.), refd to. [para. 1118].

Dickie, Re (1916), 23 B.C.R. 538 (C.A.), refd to. [para. 1126].

Boardman et al. v. Phipps, [1967] 2 A.C. 46; [1966] 3 All E.R. 721, refd to. [para. 1142].

Whiten v. Pilot Insurance Co. et al. (1999), 117 O.A.C. 201; 42 O.R.(3d) 641 (C.A.), refd to. [para. 1189].

Planon Systems Inc. v. Wade (Norman) Co. (1998), 74 O.T.C. 1 (Gen. Div.), refd to. [para. 1190].

Authors and Works Noticed:

Anderson, J., Conduct of a Civil Trial (1993), 12 Advoc. Soc. J. 2, generally [para. 10].

Baxter, I., The Law of Banking (4th Ed. 1992), p. 56 [para. 805].

Cheshire and Fifoot, Law of Contract (9th Ed. 1978), pp. 152, 153 [para. 856].

Chitty on Contracts (27th Ed. 1994), vol. 1, p. 975 [para. 875].

Crawford and Falconbridge, Banking and Bills of Exchange (8th Ed. 1986), pp. 802 [para. 805]; 814 [para. 897].

McCamus, John D., New Directions in the Concept and Definition of Fiduciary - Where are We Headed? in Agents and Fiduciaries ... The Ties that Bind ... Most of the Time (1999), generally [paras. 266, 997].

Ogilvie, M.H., Canadian Banking Law (2nd Ed. 1998), p. 458 [para. 267].

Perell, P.M., Intermeddlers or Strangers to the Breach of Trust or Fidiciary Duty (1998), 21 Adv. Q. 94, pp. 107 [para. 927]; 109, 110 [para. 920]; 116 [para. 934].

Rainaldi, Linda A., Remedies in Tort (1987), vol. 1, p. 3-19 [para. 950].

United Kingdom, Review Committee on Banking Services Law, Law and Practice Report by the Review Committee (1989), pp. 36, 37, 38 [para. 899]; paras. 5.12, 5.13, 5.14 [para. 900].

Waddams, Stephen M., The Law of Contracts (4th Ed. 1999), pp. 11 to 15 [para. 647]; 37, 38, 39 [para. 177]; 105 [para. 143]; 594 [para. 462].

Counsel:

Alan J. Lenczner, Q.C., and Timothy Gilbert, for the plaintiffs;

Catherine Francis, Ray Slattery and Tamara Van Meggelen, for the Royal Bank of Canada, Paul Dinner and Norman Tower;

William G. Horton and Paul MacDonald, for Barbican Properties Inc.;

George Hately, Q.C., and Susan Epen, for Saul Schulman and Londamir Holdings Ltd.

This action was heard on various days from September 14, 1998 to April 22, 1999, by Spence, J., of the Ontario Superior Court. Spence, J., delivered the following decision on February 8, 2000.

Please note: The following judgment has not been edited.