The appellants, including a golf course developer and the Royal Bank, appealed a trial judgment finding them liable to a class of 169 club-member investors.
The investors had provided letters of credit to secure memberships, which were drawn down by the developer and applied to a Royal Bank construction loan before the contractual conditions for draw down were met.
The Court of Appeal upheld the trial judge's findings that the developer breached its contract and fiduciary duties by drawing on the funds prematurely.
The Court also upheld the finding that the Royal Bank was liable for knowing receipt of trust funds, as it was unjustly enriched and failed to make adequate inquiries despite knowing the conditions for draw down were unmet.
The appeal was dismissed, and the awards for restitution, punitive damages, and compound interest were affirmed.
