



COURT OF APPEAL FOR ONTARIO

CITATION: Foodinvest Limited v. Royal Bank
    of Canada, 2020 ONCA 665

DATE: 20201022

DOCKET: C66522

Doherty, Paciocco and Coroza
    JJ.A.

BETWEEN

Foodinvest
    Limited

Plaintiff
(Appellant)

and

The Royal Bank of Canada

Defendant
(Respondent)

Glenroy K. Bastien, for the appellant

Catherine Francis, for the respondent

Heard: October 13, 2020 by video conference

On
    appeal from the order of Justice Edward M. Morgan of the Superior Court of
    Justice, dated December 27, 2018.

REASONS FOR DECISION

[1]

The appellant (Foodinvest) contracted with the
    respondent (RBC) for the use of a self-service transfer facility (RBC
    Express) provided by RBC. That service allowed customers to personally
    transfer and receive funds from other financial institutions.

[2]

Between March and May 2015, Foodinvest used RBC
    Express to transfer funds to accounts in a Polish bank. Foodinvest subsequently
    claimed the beneficiary of the transferred funds had misappropriated those funds
    and defrauded Foodinvest.

[3]

In late April 2015, RBC received an email from
    the Polish bank to which the funds were being transferred, indicating the
    Polish bank suspected fraud in relation to two of the transactions in which
    Foodinvest had used RBC Express to transfer funds to the Polish bank. RBC did
    not pass this information on to Foodinvest. Foodinvest sued, maintaining RBC
    was under a duty to do so.

[4]

RBC moved for summary judgment. The motion judge
    granted summary judgment and dismissed the claim. Foodinvest appeals.

[5]

In dismissing the claim, the motion judge found,
    first, Foodinvest failed to show RBCs duty of care to Foodinvest extended to
    an obligation to pass on the information provided by the Polish bank in respect
    of its suspicions about the intended recipient of the funds. Second, the motion
    judge found, even if a duty of care existed, Foodinvest had offered no expert
    evidence in respect of the standard of care owed by RBC in the circumstances.
    The motion judge reasoned, absent expert evidence of acceptable banking
    practices, there was no basis upon which to find the steps taken by RBC in
    respect of the impugned transactions fell below the applicable standard of care.

[6]

Foodinvest raises three arguments on the appeal.
    First, it submits the claim advanced by Foodinvest raised novel legal issues
    which turned on facts that were very much in dispute. Foodinvest submits its
    claim was not amenable to determination on a summary judgment motion.

[7]

We reject the submission. It was not made before
    the motion judge. In any event, the claim is not novel. The nature and extent
    of RBCs duty of care falls to be determined under the principles articulated
    in
Deloitte & Touche v. Livent Inc. (Receiver of)
, [2017] 2 SCR
    855, at paras. 30-31. Nor did the factual circumstances in which those
    principles fall to be applied here, rise to a level of novelty or complexity
    unamenable to the summary judgment process.

[8]

Second, Foodinvest submits the motion judge
    erred in holding that RBCs duty of care to Foodinvest did not extend to the
    requirement that RBC pass on the information from the Polish bank relating to
    its suspicions concerning the transactions. Foodinvest maintains once RBC was
    aware the Polish bank was concerned about the bona fides of the transaction, it
    had a duty to ascertain what the problem was and to inform the appellant
    promptly, comprehensively and competently. Foodinvest stresses this duty
    arises only because of the unusual circumstances of this case.

[9]

We cannot accept this submission. We agree with
    the motion judges duty of care analysis. The scope of RBCs duty of care to
    Foodinvest depended on the nature of the service it provided and the terms of
    the contractual relationship governing that service.

[10]

The service provided by RBC consisted of a
    self-service portal allowing Foodinvest to make and receive bank transfer on
    its own without the assistance or supervision of any bank personnel. The
    relevant agreement set out in exhaustive terms the nature and scope of RBCs
    potential liability in respect of the services it offered to Foodinvest. Like
    the motion judge, we conclude RBCs duty of care related specifically to the
    execution of the transfers made using the service provided by RBC. RBCs duty
    of care extended to taking reasonable steps to ensure the transfers were
    properly authorized and properly carried out in accordance with the
    instructions provided. That duty did not require RBC to concern itself with the
    specifics or bona fides of the underlying transactions giving rise to the
    transfers.

[11]

The transfers in issue were all authorized by
    Foodinvest. They were carried out in accordance with the intentions of
    Foodinvest and the instructions provided by it. If Foodinvest was cheated, its
    loss flows not from any failure of the service provided by RBC, but from the
    dishonesty of the entities Foodinvest chose to do business with.

[12]

As we agree with the motion judges finding RBC
    did not breach any duty of care it owed to Foodinvest, it follows the action
    was properly dismissed. We need not consider the trial judges further
    conclusion Foodinvest was obligated to call expert evidence as to appropriate
    banking practices in the circumstances.

[13]

We make two additional observations. First, the
    motion judge made references to RBCs obligation under FINTRAC, a regulatory
    scheme intended to detect and curtail money laundering. It is arguable some of
    the motion judges comments overstated RBCs obligations under FINTRAC.
    However, an exact delineation of those obligations is unnecessary to dispose of
    the appeal. Second, even if RBC could be said to have owed some duty of care to
    Foodinvest beyond the duty described above, there was substantial evidence
    adduced by RBC of steps taken to alert Foodinvest to the possibility of fraud
    in respect of the transfers. Given the motion judges findings as to the scope
    of RBCs duty of care, he did not find it necessary to examine that evidence in
    any detail. Nor do we.

[14]

As indicated at the end of oral argument, the
    appeal is dismissed. RBC does not seek costs. No order as to costs.

Doherty
    J.A.

David
    M. Paciocco J.A.

S.
    Coroza J.A.


