The Bank of Montreal applied for a receiver over a group of fitness clubs (the Crunch Group) following defaults on credit facilities.
The parties reached an agreement where the debtors' nominee would purchase the debt and security.
The Bank accepted the offer but subsequently refused to provide a fully executed copy of the agreement, causing the purchaser to lose financing and fail to close on the scheduled date.
The court found the Bank's actions, including abruptly closing the debtors' bank accounts and unreasonably refusing to deliver the executed agreement, breached the duty of good faith.
The court ordered the Bank to close the transaction.
