COURT OF APPEAL SUMMARIES (July 6 to 10, 2020)Toronto-Dominion Bank v. 1633092 Ontario Ltd., 2020 ONCA 452 (CanLII)
[Pepall, Hourigan and Roberts JJ.A.]
Oren Chaimovitch and Shawna Sosnovich, for the appellant
Andrew D. Ferguson, for the respondents
Keywords: Contracts, Privity, Banking, Debtor-Creditor, Torts, Negligence, Negligent Misrepresentation, Civil Procedure, Summary Judgment, Partial Summary Judgment, Counterclaims, Set-Off, Butera v. Chown, Cairns LLP, 2017 ONCA 783, Mason v. Perras Mongenais, 2018 ONCA 978
The appellant bank sued the corporate and personal respondents under a HELOC, Canada Small Business Financing Loan (CSBFL), line of credit, credit card loans and guarantees. The respondents defended and counterclaimed that the bank had breached its contract and been negligent. The primary allegations against the bank were that the bank over-valued the respondents’ home (relying on the wrong address for the property) and therefore advanced too much to them under the HELOC. They also claimed the bank failed to advance the full amount of the CSBFL.
Both sides brought motions for summary judgment. The motion judge granted summary judgment to the bank on the loans outstanding, but also granted partial summary judgment to the respondents on one of their counterclaims (negligent breach of contract), but only on liability, ordering damages to go to trial (the parties had agreed to a bifurcation of liability from damages). In her order and reasons for decision, the motion judge treated all the respondents as one, and did not differentiate between which causes of action for breach of contract and negligence related to which respondent. Enforcement of the judgment in favour of the bank was stayed, subject to any set-off from the amounts awarded to the respondents on the counterclaims. The bank appealed and the respondents cross-appealed.
1. Did the motion judge err in ruling that the amount owing to the bank on the HELOC had to await trial because there was a potential offset from the determination of damages for the bank’s breach of contract?
2. Did the motion judge err by failing to include her findings on breach of contract, negligence and negligent misrepresentation in her judgment, as properly reflected in her reasons?
Appeal allowed in part. Cross-appeal allowed in part.
1. No. The bank appeared to be suggesting that set-off was not available to one of the personal respondents against whom judgment on the HELOC was granted because the judgment of liability for negligent breach of contract against the bank in respect of the CSBFL was only in favour of the corporate respondent. The Court agreed that the judgment should be varied to reflect that the bank’s contract in respect of the CSBFL was only breached with respect to the corporate respondent. However, the counterclaim having been referred to trial, the issue of any available set-off should be determined at that time.
2. Yes. The motions judge’s reasons suffered from the same defect as her judgment. All of the respondents were treated as one. It appeared from her reasons that she found a negligent breach of contract, negligence and negligent misrepresentation. However, the reasons failed to analyze, with any particularity, the causes of action or how the pleadings supported her findings. Her formal judgment only referred to breach of contract, but said nothing about the respondents’ remaining counterclaims of negligence and negligent misrepresentation.
This Court noted the pitfalls associated with partial summary judgment motions, as detailed in its prior decisions. In addition, the Court warned that bifurcation of proceedings sometimes results in an absence of precision in the disposition of the claims. Here, given the absence of particularized findings connecting the causes of action to the parties wronged and to the causes of action advanced in the pleadings, the Court was of the view that the subject matter of the counterclaim should be referred to trial along with the issues relating to the bank’s defence to those counterclaims on the basis of the Rule in Foss v. Harbottle, and damages including any rights of set-off for either of the parties. In addition, the motion judge did not dispose of the bank’s claims on the line of credit, credit card debt or the unlimited guarantees. Those claims were also referred to trial. However, liability under the HELOC and the bank’s liability for negligent breach of contract of the CSBFL were not referred to trial, as they had already been determined by the motion judge.