The contractor entered into a fixed-price construction contract with a developer after receiving assurances from the developer's bank that adequate interim financing was in place.
The developer subsequently ran out of funds and the bank refused to advance further money.
The contractor sued the bank in contract and tort, and also claimed priority over the bank's mortgage under the Mechanics' Lien Act.
The Supreme Court of Canada held that while no contract existed between the bank and the contractor, the bank was liable for negligent misrepresentation because it negligently assured the contractor of adequate financing without disclosing the limitations of the loan.
The Court also held that section 4 of the Interest Act did not apply to limit the bank's interest rate, and the bank was not estopped from asserting its priority as mortgagee.
