The respondent bank sued the appellant on a hypothecary suretyship.
The parties reached a settlement agreement, but the bank subsequently withdrew its counter-offer and denied the existence of the transaction.
The trial judge and Court of Appeal both confirmed the validity of the transaction.
However, the Court of Appeal ordered the appellant to pay interest and an additional indemnity because she failed to deposit the settlement funds.
The Supreme Court of Canada allowed the appeal, holding that the appellant was never put in default by the bank, which had steadfastly refused to recognize the transaction.
Therefore, interest never began to run, and the bank could not claim interest on an obligation it had rendered impossible to perform.
