DATE: 20010117

DOCKET: C33253

COURT OF APPEAL FOR ONTARIO

RE: CANADIAN IMPERIAL BANK OF COMMERCE (Plaintiff/Respondent) v. SAULT STE. MARIE PUBLIC UTILITIES COMMISSION (Defendant/Appellant)

BEFORE: CARTHY, DOHERTY and ROSENBERG JJ.A.

COUNSEL: Michael Barrack and James Melville

for the appellant

Joseph Bisceglia

for the respondent

HEARD: January 11, 2001

Released orally: January 11, 2001

On appeal from the judgment of Mr. Justice Frank R. Caputo dated November 5, 1999.

E N D O R S E M E N T

[1] The crucial finding of the trial judge is as follows:

I find that the P.U.C. made a false representation of fact, with the knowledge that it was false, with the intention that it should be acted upon. As of January 23, all P.U.C. accounts were current except for a small amount on one or two properties. The letter of credit was not called by reason of any monies owing for services to P.U.C. by the corporate owners. The letters of credit were called to have cash replace the letter of credit pledged as security deposits for services to be rendered by the P.U.C. to the corporate owners of the properties, which letters of credit were being cancelled.

[2] We must conclude that the finding of the trial judge is unreasonable and cannot stand.

[3] In coming to his conclusion, the trial judge relied on the language used by the appellant in its demand letter sent to the respondent. The language simply tracked the language of the letter of credit and, in our view, no inference against the appellant could be drawn from the use of that language.

[4] The trial judge also found that the respondent was aware that no arrears were owing on the P.U.C. accounts when it advanced payment on the letter of credit to the appellant. This finding is entirely inconsistent with his finding that the appellant misled the respondent by claiming that its call on the letter of credit was based on a claim for arrears owing for services rendered.

[5] The trial judge’s finding is also contrary to the evidence which clearly established that the bank knew full well that its client had obtained the letter of credit for the appellant’s benefit to satisfy the appellant’s requirement that the client provide a security deposit to the respondent in respect of each of the various properties.

[6] The appeal is allowed, the order below set aside, and the action dismissed with costs.

“J.J. Carthy J.A.”

“Doherty J.A.”

“M. Rosenberg J.A.”