CITATION: Bank of Montreal v. Frankie Tomatto's Woodbine Inc., 2010 ONCA 631
DATE: 20100930
DOCKET: C50684 C50695
COURT OF APPEAL FOR ONTARIO
MacPherson, Gillese and MacFarland JJ.A.
BETWEEN: C50684
Bank of Montreal
Plaintiff (Appellant)
and
Frankie Tomatto’s Woodbine Inc.
AND BETWEEN: C50695
Frankie Tomatto’s Woodbine Inc.
Plaintiff (Respondent)
and
Moneris Solutions Corporation
Defendant (Appellant)
Martin Greenglass, for the appellants (BMO and Moneris)
Jeffrey W. Kramer and Faren Bogach, for the respondent Frankie Tomatto’s
Heard and released orally: September 16, 2010
On appeal from the judgment of Justice Jane E. Kelly of the Superior Court of Justice dated June 2, 2009.
ENDORSEMENT
[1] In our view, the appeal must be dismissed.
[2] Moneris (the appellant) argues that it was merely the agent of its disclosed principal BMO and accordingly the respondent’s action properly lies not against it, but rather, against BMO. We cannot accept that submission. While the respondent’s original agreement in 1994 was with BMO, in 2000 BMO wrote to its merchants, including the respondent, in a letter dated October 24 in which it stated:
Your MasterCard Merchant Agreement will be amended to provide that Moneris Solutions Corp. will take over Bank of Montreal’s rights and responsibilities. …
Your Debit Card Merchant Agreement and Point of Sale Services Agreement will be assigned to Moneris Solutions Corp.
[3] Nowhere in that document is it stated that Moneris is the agent of BMO. Following that document in September 2004 Moneris sent to all merchants it dealt with, including the respondent, a document entitled:
Moneris VISA Merchant Agreement
Moneris MasterCard Merchant Agreement and
Moneris Debit Card Terminal Agreement
[4] Again, nothing in this document states that the appellant is the mere agent of BMO. Indeed, Clause 1.3 of the Agreement refers to Moneris and “the Bank” interchangeably.
1.3 – Fees
(b) All fees, charges or adjustments payable by you to us or the Bank for a breach of this Agreement or any amount of a Chargeback, or Credit Slip issued by you shall constitute a debt payable to us and/or the Bank for which we and/or the Bank may debit your bank account without your prior notice.
[5] This was a contract with the respondent where both the appellant and the Bank had individual contractual rights vis-à-vis the respondent. These are not the indicia of a mere agent.
[6] Further, the evidence of Ms. Glowinsky confirmed that it was the appellant that instructed the bank to debit the respondent’s account. She was asked:
Q.: You were the one who directed the branch to withdraw the money and told them where to put it?
A.: We sent instructions, I guess you could put it that way, to debit the account, yes.
[7] Where the contract provides that the appellant and/or BMO have the right to debit the respondent’s bank account, the issue is not, as the appellant argues, merely one involving a banker and its customer who has funds on deposit. We would not give effect to this ground of appeal.
[8] It is undisputed that the Agreement between the appellant and the respondent is a contract of adhesion and, accordingly, if there is ambiguity or uncertainty, will be interpreted against the maker thereof.
[9] The fines imposed by MasterCard were pursuant to s. 9.5.2.3 of the by-laws and rules and s. 10.2.1 of the security rules and procedures which are contained in a document that was never provided to the respondent. As the trial judge noted: “The fines were not imposed pursuant to terms set out in the agreement”. There was nothing in the Agreement or otherwise that provided any guidance to the respondent of what MasterCard’s specific security requirements were nor importantly, any provision to the effect that if the respondent did not comply with those requirements it would be subject to a fine.
[10] This can be contrasted with the Visa Agreement, which specifically provided:
If you fail to comply with the Visa Account Information Security Program and, due to your non-compliance with such program, a fine is imposed on us under the program, the amount of such fine shall be of charge payable by you to us under Article 13.0 of this Agreement.
[11] There is no similar language in the Moneris MasterCard Agreement with the respondent and in such circumstances, where the respondent has not been provided with the rules and regulations pursuant to which the fine has purportedly been imposed and there is no term in the contract to that effect, the merchant cannot be held liable for the fine.
[12] We would therefore affirm the trial judgment against the appellant who had no right to debit the respondent’s bank account in these circumstances.
[13] BMO’s action against the respondent cannot succeed for two reasons.
It failed to prove that conduct on the part of the respondent caused or necessitated the replacement of a number of credit cards. As the trial judge noted, there must be some proof that the cost of replacing the cards is as a result of some conduct on the part of the respondent.
While the agreement states that the merchants are required to
… store materials containing Cardholder or Transaction information in a secure area limited to selected personnel in accordance with applicable laws and the Card Association Rules and Regulations ...
it does not stipulate that the merchant will be responsible for any costs incurred in the event of a breach of this provision, again, this can be contrasted with the provision in the Visa Agreement quoted above.
Further, BMO provided insufficient evidence to demonstrate how the sum of $65,036.40 was calculated.
[14] The appeals are dismissed.
[15] Costs to the respondent fixed at $17,800.00 inclusive of disbursements and applicable taxes.
“J. C. MacPherson J.A.”
“E. E. Gillese J.A.”
“J. MacFarland J.A.”