Case Name:

Matrix Contractors Building Services Inc. v. National

 Bank of Canada




Matrix Contractors & Building Services Inc. and

Business Ventures Inc., appellant(s), and

National Bank of Canada, respondent(s)


[2005] O.J. No. 2931


200 O.A.C. 201


141 A.C.W.S. (3d) 223


Docket: C42167



 Ontario Court of Appeal

 Toronto, Ontario


K.M. Weiler, M.J. Moldaver and S.E. Lang JJ.A.


Heard: July 7, 2005.

 Judgment: July 13, 2005.


(13 paras.)


Commercial law -- Banking -- Financial institutions -- Liability to third parties -- Appeal from dismissal of action allowed.


 Tort law -- Fraud and misrepresentation -- Fraudulent misrepresentation.


Appeal by Matrix Contractors from the dismissal of its action against the bank for misrepresentation, breach of trust, deceit, and unjust enrichment. Matrix relied upon a statement by the bank that it would loan $150,000 to Matrix's client. Matrix did the client's work but, because the bank did not advance the money, the client could not pay Matrix. The trial judge found the bank did make the representation to Matrix, but that it also stated the loan was conditional on the bank obtaining a guarantor's signature. The trial judge accepted testimony by a Matrix representative that the bank downplayed the need for a signature.

HELD: Appeal allowed. The lower court's decision was set aside and judgment was entered in favour of Matrix in the amount of $148,180. The trial judge misapprehended the evidence about the required signature. The bank represented that the loan was a sure thing and knew Matrix would rely upon that representation.


Appeal From:

On appeal from the judgment of J.G. Quinn J., of the Superior Court of Justice, dated July 9, 2004.



Raymond Colautti and Anita Landry for the appellant

Arthur Barat and Avril Farlam for the respondent





The following judgment was delivered by

1     THE COURT:-- Matrix Contractors & Building Services Inc. ("Matrix") appeals from the judgment of J.G. Quinn J., which dismissed Matrix's action against National Bank of Canada ("the Bank"). Although, according to the Notice of Appeal, Business Ventures Inc. ("B.V.I.") also appealed, that appeal has since been abandoned and is dismissed.

2     Matrix's action against the Bank was framed in misrepresentation, breach of trust, deceit, and unjust enrichment. Matrix contracted to renovate space in a strip mall owned by Latif Inc. ("Latif"). Latif required the renovations, which were to cost an estimated $150,000, to accommodate Bi-Way, its proposed anchor tenant.

3     Matrix argued that it relied on a representation by the Bank that the Bank would advance the $150,000 to Latif to pay Matrix for its work. The Bank never made the advance. When Matrix was unable to collect from Latif, it sued the Bank. At trial, the Bank took the position that the Bank never intended to advance further funds to this project for renovations or for any other purpose and that it made no representations to Matrix that it would make the advance.

4     The trial judge found, to the contrary, that the Bank did represent to Matrix that the renovation loan would be advanced to Latif. However, the trial judge also found that the Bank told Matrix that the loan was conditional upon the Bank obtaining a guarantor's signature for the loan and that the Bank had therefore not misrepresented its position to Matrix. Accordingly, on that basis alone, he concluded that Matrix had failed to make out a case against the Bank for either fraudulent or negligent misrepresentation.

5     Although the trial judge accepted the appellant's evidence, he characterized the Bank representation as one that may have "under emphasized the [need for the] guarantor's approval". However, the trial judge accepted the evidence of Gary Anderson who testified on behalf of Matrix, that the Bank never made any mention of any guarantor to Matrix. The trial judge summarized Anderson's evidence about the representations as follows:


1.            Prior to the construction contract being signed, Anderson, Jankowski and Arabo were in B.V.I.'s offices. Jankowski and Arabo spoke to either Murphy or Widdifield. Gary Anderson testified that while he has no first hand knowledge of what was said on the phone, it was his understanding that the financing was going forth and the bank had given its assurance to proceed.

2.            The day after the telephone call referred to above, Gary Anderson went to the defendant's premises on Ouellette Avenue in Windsor. Mr. Anderson met Mr. Widdifield and Mr. Widdifield told Mr. Anderson: "... I was correct in my understanding of the financing. The i's were dotted, the application had been the made, the i's were dotted, the t's were crossed, they were however waiting on one signature but don't lose that tenant, it makes the plaza or something of those terms."

3.            On the day the contract was signed, April 12, 1999, Anderson, Jankowski and Arabo were again in B.V.I.'s offices and a telephone call was placed to the defendant bank. Anderson did not speak to the bank's representative but understood similar assurances were given as in number 1 above.

4.            After the renovation work had started and the first invoice was sent to Latif Inc., Gary Anderson telephoned Eric Widdifield. Gary Anderson testified: "... he seemed a bit more evasive, but the essence of his statements were somewhat parallel to what he had told me at this, as you deem it, the cigarette meeting whereby he's saying he's still waiting for a signature. And I said, 'You know, I thought that signature was coming a week and a half to two weeks ago, and maybe even a week and a half prior to that', from what his, you know, what I understood. And he said, well, he reinforced the fact that this gentleman was from out of town, he traveled a lot, but you know, and again he kind of shyed away.'"

6     Given this evidence, in our view, in otherwise careful reasons, the trial judge misapprehended the evidence about the required signature. On the evidence, the Bank told Matrix that the Bank was only waiting for one further signature; that the Bank had been in frequent contact with the signatory; and that the signature would be forthcoming at any time as soon as the signatory returned from his travels.

7     That the Bank represented that that signature was a mere formality is the only inference reasonably to be taken from its statement to Matrix, in the only direct meeting between Anderson and the Bank's representative, that all the "i's" were dotted and that all the "t's" were crossed with respect to the loan. There is a significant difference between needing the signature of a guarantor not yet requested and awaiting the formality of a signature of a person who has already agreed to sign.

8     In considering Anderson's evidence, particularly his evidence about the direct discussion, the trial judge commented that Anderson "only had one reason to meet with [the Bank's employee] and that was to receive assurances that funding was in place. Gary Anderson had a clear and specific recollection of the conversation." Further, the Bank had reason to give that assurance. It considered the outstanding loan on the mall to be in jeopardy; it was very much in the Bank's interest for Matrix to proceed with the renovations, which would secure the necessary anchor tenant for the mall.

9     In addition to Anderson's evidence, the trial judge considered the evidence of Rabah Arabo, a principal shareholder of Latif. Arabo's evidence supported Anderson's recollection. Thus, the trial judge determined that the "evidence referred to above of Gary Anderson and Rabah Arabo captures the essence of the representations."

10     There was no evidence that Arabo told Anderson of any need for a guarantor's signature before Matrix signed the renovation contract and began the work. Indeed, Arabo's evidence was that the Bank only informed him of its requirement for the guarantor's signature after Matrix had completed much of the renovations. Only then, it seems, did the Bank consider the loan, process the application through the Bank channels, and contact the guarantor - who, according to the Bank, then refused to sign. Accordingly, the trial judge erred in attributing Arabo's later knowledge about the need for a guarantor's signature to Matrix at the time it entered into the contract and began the renovations.

11     When the Bank represented to Matrix that the loan was, in effect, a sure thing, it not only knew this was untrue, but that Matrix would rely on that representation. As the trial judge said in his reasons on costs dated February 8, 2005, the Bank's representations "were instrumental in persuading Plaintiff Matrix to proceed with the renovations to its detriment." That finding contradicts the trial judge's finding, in his reasons for judgment, that Matrix did not rely on the Bank's representation. In his reasons for judgment, the trial judge looked to Matrix's after the fact conduct to find an absence of reliance at the time the contract was entered into. We are of the opinion that Matrix's post-renovation conduct was consistent with its reasonable efforts first to collect from Latif and, when unable to do so, to pursue the Bank. Thus, while the trial judge was entitled to have regard to Matrix's after the fact conduct, that conduct does not support the inference he drew from it and, in any event, is not determinative in view of the trial judge's further finding that the Bank induced Matrix to enter into the contract to proceed with the renovations.

12     Given our conclusion that the evidence established the Bank's misrepresentation and Matrix's reliance, it is unnecessary to deal with the other grounds of appeal.

13     Accordingly, the appeal is allowed and the judgment below is set aside. Judgment is entered in favour of Matrix in the undisputed amount of $148,180 plus pre-judgment interest at the contract rate. In addition, as found by the trial judge, Matrix is entitled to legal costs of $2,470.51 for the lien. The appellant is also entitled to its trial costs on a partial indemnity basis following assessment. The appellant is entitled to its costs of this appeal fixed in the amount of $10,000 inclusive of disbursements and GST.