Bank’s Misrepresentation to Contractor Results in Damage Award:
Matrix Contractors & Building Services Inc. v. National Bank of Canada

On July 13, 2005 the Ontario Court of Appeal reversed a trial judge’s decision to dismiss an action brought against a chartered bank for misrepresentation. On appeal, the Court found that the bank had knowingly misled the contractor with respect to the availability of the owner’s financing, and that the contractor had relied on that misrepresentation to its detriment. Matrix did the work, did not get paid for it, and now the Court of Appeal has said the Bank must pay.

Matrix contracted to renovate space in a strip mall. The mall owner, Latif, required the renovations, which were to cost an estimated $150,000, to accommodate a proposed anchor tenant. Matrix 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 in an action framed in misrepresentation, breach of trust, deceit, and unjust enrichment.

The evidence showed that 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. In other words, the Bank represented that that signature was a mere formality.

The Bank had reason to give that assurance. It considered the outstanding loan on the mall to be in jeopardy. Therefore, 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.

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. The Bank’s representations were instrumental in persuading Plaintiff Matrix to proceed with the renovations to its detriment.

The court awarded Matrix damages in the undisputed amount of $148,180 plus pre-judgment interest at the contract rate.