Toronto-Dominion Bank v. Leigh Instruments Ltd. (Bankrupt) et al., (1998) 63 O.T.C. 1 (GD)

• Judge: Winkler, J.
• Court: Ontario Court of Justice General Division (Canada)
• Case Date: January 13, 1997
• Jurisdiction: Ontario
• Citations: (1998), 63 O.T.C. 1 (GD)

TD Bk. v. Leigh Instruments Ltd. (1998), 63 O.T.C. 1 (GD)

MLB headnote and full text

Temp. Cite: [1998] O.T.C. TBEd. JN.133

The Toronto-Dominion Bank (plaintiff) v. Peat Marwick Thorne Inc., in its capacity as Trustee of the Estate of Leigh Instruments Limited, a bankrupt; The Plessey Company plc; GEC Siemens plc; and The General Electric Company plc (defendants)

(Court File No. 51353/90; Commercial List Court File No. B195/94)

Indexed As: Toronto-Dominion Bank v. Leigh Instruments Ltd. (Bankrupt) et al.

Ontario Court of Justice

General Division

Commercial List

Winkler, J.

June 24, 1998.

Summary:

The Toronto-Dominion Bank ("TD") granted a loan facility to Plessey Canada, a wholly-owned subsidiary of Plessey Co. Plessey Co. provided TD with a comfort letter. The loan was used by Plessey Canada to acquire Leigh Instruments. Leigh and Plessey Canada were amalgamated. Leigh became responsible for the loan. Leigh experienced financial difficulties. TD increased Leigh's loan facility numerous times. On each occasion, Plessey Co. issued a comfort letter replacing the existing one. Plessey Co. was subsequently acquired by GEC Siemens as a result of a hostile takeover bid. GEC refused to honour the last comfort letter, which expressly stated that it was not a legally binding commitment. Leigh became bankrupt. TD sued Plessey Co. and GEC under the comfort letter, claiming damages for breach of contract and alternatively, for negligent or fraudulent misrepresentation.

The Ontario Court (General Division) dismissed the claims and provisionally assessed damages.

Editor's note: for related matters, see 27 O.T.C. 235; 29 O.T.C. 86; 31 O.T.C. 267; 40 O.T.C. 143; 43 O.T.C. 228.

Banks and Banking - Topic 4804

Letters of comfort - Enforceability of - See paragraphs 398 to 455.

Contracts - Topic 2182

Terms - Representations - Representation v. warranty - See paragraphs 419 to 427.

Contracts - Topic 2184

Terms - Representations - What constitutes a representation - See paragraphs 419 to 427.

Contracts - Topic 3523

Performance or breach - Breach - What constitutes a breach - See paragraphs 398 to 455.

Contracts - Topic 4021

Remedies for breach - Damages - See paragraphs 542 to 545.

Contracts - Topic 7430

Interpretation - Ambiguity - Admissibility of extrinsic evidence - See paragraphs 411 to 415.

Contracts - Topic 7433

Interpretation - Ambiguity - Contra proferentem rule - See paragraphs 450 to 453.

Contracts - Topic 7526

Interpretation - Surrounding circumstances - Commercial setting - See paragraphs 407 to 410 and 431 to 436.

Damage Awards - Topic 766

Torts - Fraud and misrepresentation - Negligent misrepresentation - See paragraphs 543 and 546 to 551.

Damage Awards - Topic 1001

Contracts - General - See paragraphs 542 to 545.

Fraud and Misrepresentation - Topic 6

Fraudulent misrepresentation (deceit) - General principles - What constitutes deceit or fraudulent misrepresentation - See paragraphs 531 to 533.

Fraud and Misrepresentation - Topic 7

Fraudulent misrepresentation (deceit) - General principles - What constitutes fraud - See paragraphs 537 to 541.

Fraud and Misrepresentation - Topic 2502

Misrepresentation - General principles - Elements of actionable misrepresentation - See paragraphs 460 to 476.

Fraud and Misrepresentation - Topic 2508

Misrepresentation - General principles - Negligent misrepresentation - See paragraphs 460 to 476 and 482 to 541.

Fraud and Misrepresentation - Topic 2533

Misrepresentation - Elements - Special relationships - See paragraphs 462 to 465 and 483.

Fraud and Misrepresentation - Topic 2535

Misrepresentation - Elements - Reliance - See paragraphs 519 to 529

Cases Noticed:

Kleinwort Benson Ltd. v. Malaysia Mining Corp. Berhad, [1989] 1 All E.R. 785 (C.A.), refd to. [para. 33].

R. v. Mohan, [1994] 2 S.C.R. 9; 166 N.R. 245; 71 O.A.C. 241, refd to. [para. 391].

Hawrish v. Bank of Montreal, [1969] S.C.R. 515, refd to. [para. 404].

Prenn v. Simmonds, [1971] 1 W.L.R. 1381 (H.L.), refd to. [para. 405].

Craighampton Investments Ltd. v. Ayerswood Developments Ltd. and Lynhurst Estate Ltd. (1984), 4 O.A.C. 124 (C.A.), refd to. [para. 406].

Reardon Smith Line Ltd. v. Hansen-Tangen; Hansen-Tangen v. Sanko Steamship Co., [1976] 3 All E.R. 570 (H.L.), refd to. [para. 407].

Hill v. Nova Scotia (Attorney General), [1997] 1 S.C.R. 69; 206 N.R. 299; 157 N.S.R.(2d) 81; 462 A.P.R. 81, refd to. [para. 408].

White, Fluhman and Eddy v. Central Trust Co. and Smith Estate (1984), 54 N.B.R.(2d) 293; 140 A.P.R. 293 (C.A.), refd to. [para. 408].

Leitch Gold Mines v. Texas Gulf Sulphur Co., [1969] 1 O.R. 469 (H.C.), refd to. [para. 411].

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488, refd to. [para. 411].

Alampi v. Swartz, [1964] 1 O.R. 488 (C.A.), refd to. [para. 412].

TransCanada Pipelines Ltd. v. Northern and Central Gas Corp. (1983), 41 O.R.(2d) 447 (C.A.), refd to. [para. 413].

Andersen (Arthur) Inc. v. Toronto-Dominion Bank et al. (1994), 71 O.A.C. 1; 17 O.R.(3d) 363 (C.A.), refd to. [para. 413].

Banque Brussels Lambert SA v. Australian National Industries Ltd., [1989] 21 N.S.W.L.R. 502 (S.C.N.S.W.), not appld. [para. 423].

Atlantic Computers plc, Re, [1995] B.C.C. 696 (Ch. D. - Companies Ct.), folld. [para. 423].

Canadian Pacific Hotels Ltd. v. Bank of Montreal, [1987] 1 S.C.R. 711; 77 N.R. 161; 21 O.A.C. 321, refd to. [para. 436].

Rowen (Charles P.) & Associates Inc. v. CIBA-Geigy Canada Ltd. (1994), 72 O.A.C. 321; 19 O.R.(3d) 205 (C.A.), refd to. [para. 436].

Esso Petroleum Co. v. Mardon, [1976] 2 All E.R. 5 (C.A.), refd to. [para. 449].

Hillis Oil and Sales Ltd. v. Wynn's Canada Ltd., [1986] 1 S.C.R. 57; 65 N.R. 23; 71 N.S.R.(2d) 353; 171 A.P.R. 353, refd to. [para. 451].

Alex Duff Realty Ltd. v. Eaglecrest Holdings Ltd. et al., [1983] 5 W.W.R. 61; 44 A.R. 67 (C.A.), refd to. [para. 451].

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. 460].

Caparo Industries v. Dickman et al., [1990] 1 All E.R. 568; 108 N.R. 81 (H.L.), refd to. [para. 462].

Hercules Management Ltd. et al. v. Ernst & Young et al., [1997] 2 S.C.R. 165; 211 N.R. 352; 115 Man.R.(2d) 241; 139 W.A.C. 241, appld. [para. 463].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 463].

Spinks v. Canada (1996), 195 N.R. 184; 134 D.L.R.(4th) 223 (F.C.A.), refd to. [para. 468].

Kripps et al. v. Touche Ross & Co. et al. (1997), 89 B.C.A.C. 288; 145 W.A.C. 288; 35 C.C.L.T.(2d) 60 (C.A.), leave to appeal refused (1997), 225 N.R. 236; 102 B.C.A.C. 238; 166 W.A.C. 238 (S.C.C.), refd to. [para. 470].

Derry v. Peek (1889), 14 App. Cas. 337 (H.L.), refd to. [para. 477].

BG Checo International Ltd. v. British Columbia Hydro and Power Authority (1990), 4 C.C.L.T.(2d) 161 (B.C.C.A.), affd. [1993] 1 S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241, folld. [para. 478].

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.), leave to appeal refused (1986), 65 N.R. 78; 15 O.A.C. 237 (S.C.C.), refd to. [para. 478].

Rainbow Industrial Caterers Ltd. v. Canadian National Railway Co. (1988), 54 D.L.R.(4th) 43 (B.C.C.A.), refd to. [para. 480].

Brownlie v. Campbell (1880), 5 App. Cas. 925 (H.L.), refd to. [para. 480].

Abel v. McDonald, [1964] 2 O.R. 256 (C.A.), refd to. [para. 481].

R. v. Canadian Dredge & Dock Co., Marine Industries Ltd., Porter (J.P.) Co. and Richelieu Dredging Corp., [1985] 1 S.C.R. 662; 59 N.R. 241; 9 O.A.C. 321, folld. [para. 532].

Smith New Court Securities Ltd. v. Scrimgeour Vickers (Asset Management) Ltd. et al., [1996] 4 All E.R. 769; 206 N.R. 30 (H.L.), refd to. [para. 552].

Authors and Works Noticed:

Anson, W.R., The Law of Contract (25th Ed. 1979), p. 151 [para. 451].

Chitty on Contracts (27th Ed. 1994), vol. 1, p. 580 [para. 403].

Fridman, G.H.L., The Law of Contract in Canada (3rd Ed. 1994), pp. 3, 4 [para. 421]; 455, 456 [para. 404]; 469 [para. 409].

Klar, Lewis N., Tort Law (1991), p. 160 [para. 472].

Linden, Allen M., Canadian Tort Law (6th Ed. 1997), pp. 445, 446 [para. 476].

McGregor on Damages (15th Ed. 1997), pp. 9, 10, 11 [para. 543].

Perell, P., False Statements (1996), 18 Adv. Q. 232, p. 242 [para. 479].

Waddams, Stephen M., The Law of Contracts (3rd Ed. 1993), p. 210 [para. 405].

Waddams, Stephen M., The Law of Damages (Rev. 2nd Ed. 1993), pp. 5 to 19 [para. 552].

Counsel:

John A. Campion, Peter Downard and Paul F. Monahan, for the plaintiff;

Earl A. Cherniak, Q.C., Robert J., Morris, Susan B. Wortzman and Lisa C. Munro, for the defendant, The Plessey Co. plc;

Peter F.C. Howard, Johanna Superina and Adrian C. Lang, for the defendant, The General Electric Co. plc.

This action was heard from January 13, 1997 to May 1, 1998, by Winkler, J., of the Ontario Court (General Division), who released the following decision on June 24, 1998.