Roger Reinhardt

The appellant bank recalled a loan and liquidated the assets of the respondents' family company within three hours, knowing the respondents were negotiating a sale of their shares.

The respondents subsequently sold their shares at a significantly reduced price and sued the bank for the difference.

The Supreme Court of Canada held that while the bank had a contractual right to recall the loan, the sudden liquidation without reasonable notice constituted an abuse of contractual rights.

Although the respondents could not sue under the contract or by lifting the corporate veil, the bank's actions constituted an independent fault under article 1053 of the Civil Code of Lower Canada, making it delictually liable to the shareholders for their direct financial loss.

The appellant bank claimed over $122,000 from the heirs of a deceased surety based on two continuing letters of suretyship.

The bank had made advances to the principal debtor after the surety's death, knowing of the death, but failed to inform the heirs of the existence of the revocable suretyships.

The Supreme Court of Canada held that while the obligation to cover future debts is a true suretyship that passes to heirs, the bank committed a fault by failing to disclose the suretyships to the heirs when it took the initiative to inform them of other debts.

This fault gave rise to a fin de non-recevoir, precluding the bank from recovering the post-death advances from the heirs.