



COURT OF APPEAL FOR ONTARIO

CITATION: Royal Bank of Canada v. Bedard,
    2022 ONCA 227

DATE: 20220321

DOCKET: C68416

Rouleau, Nordheimer and George
    JJ.A.

BETWEEN

Royal
    Bank of Canada

Respondent (Plaintiff)

and

Daniel Bedard and Colleen Bedard

Appellants (Defendants)

Norman Mizobuchi, for the appellant

Catherine Francis, for the respondent

Heard: March 3, 2022, by video conference

On
    appeal from the judgment of Justice Paul Kane of the Superior Court of Justice,
    dated October 2, 2020.

REASONS FOR DECISION

[1]

The appellant appeals the trial judgment
    awarding the respondent Royal Bank of Canada (RBC) the sum of $274,962.38 plus
    pre-judgment interest and costs. The trial judge also ordered that the judgment
    not be released by an order of discharge pursuant to s. 178(1)(e) of the
Bankruptcy
    and Insolvency Act
R.S.C., 1985, c. B-3 (
BIA
).

[2]

RBCs claim was for breach of a conditional
    Sales Contract (Contract) for the purchase of a 2003 57-foot Carver boat (57
    Carver). It claimed payment of the outstanding balance as well as reimbursement
    for costs it incurred seeking to enforce its secured interest in the 57 Carver.
    The enforcement proceeding was unsuccessful as, unbeknownst to RBC, the 57
    Carver had been sold to two subsequent third-party buyers. RBC also alleged that
    the appellants had not used the advance made under the Contract to purchase the
    57 Carver.

[3]

RBC offered to renew the loan with a new maturity
    date and at a higher interest rate. This offer of renewal was made after RBC
    became aware of the alleged breaches by the appellants. The renewal offer appears
    to have been generated by RBCs administration without the knowledge of the RBC
    personnel dealing with the problems with the appellants security. The appellants
    appear to have accepted the offer as they continued to make payments pursuant
    to the Contract at the new interest rate.

[4]

The trial judge allowed RBCs claim.

[5]

The appellants first ground of appeal is that
    the trial judge erred in allowing RBCs claim in fraud. The appellant explains
    that, because the loan was renewed after RBC became aware of the issues with
    respect to the security, it could not advance a claim that it was misled or
    defrauded. In that regard, they rely on
Burrows v. Burke
(1984), 49 O.R.
    (2d) 76 (C.A.), leave to appeal refused, [1985] S.C.C.A. No. 139.

[6]

We reject this ground of appeal. As submitted by
    RBC, its claim was for breach of contract. The trial judge acknowledged that,
    when it sent its offer to renew the loan, RBC was aware of the fact that the
    loan proceeds had not been used to purchase the 57 Carver and that the 57 Carver
    had been seized by a third party. The trial judge found, however, that other
    than the maturity date and the interest rate, the renewal of the Contract maintained
    all other terms and conditions including RBCs right to have security in the
    form of the 57 Carver. The continuing obligation of the appellants to provide
    RBC with a security interest in the 57 Carver distinguishes this case from the
Burrows
decision. The appellants continuing failure to provide the security
    constituted a breach entitling RBC to the judgment it obtained in this case.

[7]

The judgment does not, as the appellants allege,
    rest on the trial judges findings and comments regarding the appellants misrepresentations
    that induced RBC to make the loan.

[8]

The second ground of appeal is that the trial
    judge erred in awarding RBC remedies both in contract and in tort. The
    appellants submit that the trial judge could not both decide that RBC had been induced
    to enter into the Contract which entitled it to be returned to the position it
    would have been had the Contract not been entered into and, as well, award RBC
    damages for breach of that Contract.

[9]

We see no error in the trial judges award of
    damages. As we have noted, the claim and recovery in this case were for breach
    of contract and the damage award was made on that basis.

[10]

We acknowledge, however that the judges order
    that the judgment should survive bankruptcy is an error which gave rise to some
    confusion. The trial judge found that the original loan had been obtained by
    means of false pretences or fraudulent misrepresentation. He determined,
    therefore, that an order that the judgment not be released by an order of
    discharge pursuant to s. 178(1)(e) of the
BIA
was warranted.

[11]

The trial judge erred in making this order as he
    did not consider the impact that the renewal may have had on the availability
    of such an order. As noted earlier, at the time of the renewal, RBC was fully
    aware of the problems with respect to the original loan and the security for
    that loan. In our view, the trial judge ought to have left this issue to be
    addressed by the Bankruptcy Court in the event that the appellants are
    petitioned into, or declare, bankruptcy. We therefore conclude that this
    provision of the judgment should be set aside. It will be for the Bankruptcy
    Court to address whether such an order is warranted should the issue ever arise.

[12]

In conclusion, the appeal is allowed in part by
    striking paragraph 4 of the judgment. In all other respects, the appeal is
    dismissed.

[13]

RBC was substantially successful and as a
    result, we award it costs fixed in the all-inclusive amount of $14,000.

Paul
    Rouleau J.A.

I.V.B.
    Nordheimer J.A.

J.
    George J.A.


