Court File and Parties

COURT FILE NO.: C-1066-10 DATE: 2016-08-11 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Willowbrook Nurseries Inc. Plaintiff – and – Royal Bank of Canada Defendant

COUNSEL: Irwin A. Duncan and David M. Steele, Counsel for the Plaintiff Milton A. Davis and Samantha M. Green, Counsel for the Defendant

HEARD: January 29, 2016 February 1, 2, 3, 4, 5, 2016 May 2, 3, 2016

BEFORE: The Honourable Mr. Justice R. D. Reilly

REASONS FOR JUDGMENT

[1] In this action the plaintiff is seeking to establish that the defendant breached its obligation to give reasonable notice that the loan agreement between them would be changed. The plaintiff alleges an overarching agreement between the parties that loans extended in the past would be approved in the future, that the defendant’s obligations pursuant to an overarching agreement between the parties and previous practice justified the loans that the plaintiff was seeking and that therefore the defendant should be liable for damages as a result of a violation of the agreement between the parties.

[2] The plaintiff Willowbrook was a well-established thriving business. Prior to 2005, they had operated in South Western Ontario, with CIBC as their banker. Their account manager, Donald Troup, had become a trusted advisor and I might say, a friend, as their account manager at CIBC. In 2005, Donald Troup moved to RBC and persuaded the plaintiff company, Willowbrook, to move with him. Willowbrook was managed by a husband and wife, John Langendoen and Jocelyn Langendoen.

[3] Willowbrook’s account at RBC was administered by Donald Troup, who had been their account manager at CIBC.

[4] From the beginning of the relationship at their new bank, RBC, the relationship seems to have been a positive one. As noted, the account was administered by Donald Troup, who had previously administered their account at CIBC.

[5] In December of 2008, Donald Troup made an application to RBC to restructure the loans of the plaintiff corporation. Over the years with RBC, the plaintiff had received continuing credit, in part by temporary accommodation requests (TARs) that had provided temporary financing for the activities of Willowbrook Nurseries.

[6] Apparently in the Fall of 2008, Donald Troup, their account manager, had made an application to RBC to restructure the loans of Willowbrook Nurseries. On December 5, 2008, RBC advised the plaintiff that:

(1) they would not receive the temporary line of credit accommodation (TAR) that it had received in every year that it had been with RBC; (2) its account was being placed with RBC’s special loans department; and (3) Peter Gordon would replace Donald Troup as Willbrook’s account manager.

[7] On December 3, 2008, a letter from RBC intended to arrange a meeting for December 5 refers to the established practice of using TARs or bulges in Willowbrook’s line of credit, stated the following:

We remind you that notwithstanding excesses that may have been permitted in the past, your accounts and loans are to continue to operate and repay as agreed upon within approved limits.

[8] The plaintiff takes the position that this position by RBC was a breach of its obligation to give reasonable notice of a fundamental change to the lending agreements that RBC had entered into the previous four years. This conduct, the plaintiff says, amounts to bad faith.

[9] The plaintiff Willowbrook had started in 1979 as a partnership with John and Jocelyn Langendoen. When the company moved to RBC from CIBC in 2005, it had ownership of four farm properties, gross sales in excess of $8,000,000, net income in excess of $800,000 and inventory in excess of $10,000,000, as well as retained earnings in excess of $7,000,000.

[10] The bottom line is that the plaintiff Willowbrook was on a sound financial basis, although it is clear that most of its income was received in the months of April to October, when its nursery stock was sold to customers. In other months, it incurred significant expense to cover operating costs and to prepare product for the next sale’s season. When the plaintiff Willowbrook first began to deal with RBC, they were credited with a “Credit Facilities Letter” dated January 10, 2005. They had an operating line of credit in the amount of $2,000,000, together with a $350,000 demand loan.

[11] Four days later, the terms of the initial Credit Facilities Letter were amended to increase the line of credit to $2,250,000. Within six weeks, RBC authorized a further $100,000 installment loan. By March 10, RBC had increased the line of credit limit to $2,650,000.

[12] RBC also provided Royfarm mortgages to finance some of the farm properties owned by Willowbrook. One of the Royfarm mortgages was initially for $4,000,000. By the end of 2008, that mortgage was paid down to $2,614,751. There was also a smaller mortgage that was paid down to $77,103, by December 31, 2008.

[13] RBC also provided Willowbrook for a leased facility for equipment leasing. There was a master lease agreement signed on October 10, 2005. The maximum limit of a leased facility was $300,000. It may be noted that the amount actually advanced pursuant to equipment leases was only $254,948, as of April 2009.

[14] RBC also provided corporate Visas to Willowbrook. The initial limit was for $100,000, but was later increased to $150,000. When RBC was paid out on April 2009, the total amount owing on the Visa account was only $18,080.46.

[15] Willowbrook Nurseries continued to grow and prosper. By July 21, 2008, its financial statements showed that it owned four farms, it operated 1,064,000 square feet of greenhouses and inventory of almost $13,000,000 (valued at cost). It had gross revenue of $8,700,395, net income of $641,838 and retained earnings of $9,130,575. The plaintiff emphasizes that these property acquisitions and capital improvements were financed entirely from operating funds and not covered by long term debt.

[16] Over the four year period following 2004, Willowbrook was consistently profitable. Its gross sales increased year after year and retained earnings had increased significantly by 2008, except for one fiscal year, 2007. In 2007, there was a small decline of less than 2.5%, but in that same year, its net income increased, in excess of $37,000.

[17] In the Fall of 2006, the plaintiff Willowbrook, encountered problems with a product supplied by “Gro-Bark”, a growing medium for its product that proved unsuitable for use. The resulting damage to and loss of some inventory impacted 2007 sales. Some of the inventory had to be transplanted into new containers with a new growing medium.

[18] As a result of this problem, a claim was filed against “Gro-Bark” for $450,000 and shown as an account receivable in the financial statements. The plaintiff maintains that, together with the action against Gro-Bark, all losses had been absorbed and the losses would be recovered.

[19] In 2008, Rona was lost as a customer as a result of a contract dispute. Sales that would otherwise have gone to Rona were however sold to other customers, such as Canadian Tire and Sobey’s. In effect, in 2008 there was no loss in terms of Willowbrook’s profitability. Indeed, Willowbrook expanded its inventory.

[20] Throughout this entire period, Willowbrook never defaulted in any payment obligations to RBC. Indeed, Willowbrook never breached any of the covenants that were stipulated by RBC in Credit Facilities Letters or any other banking documents. In sum, Willowbrook was never advised of any concerns on the part of RBC, as a result of Willowbrook’s financial performance or its ability to meet its obligations to RBC.

[21] The Credit Facilities Letter dated December 13, 2007, signed by the parties, provided an operating loan of $3,750,000. By letter dated January 28, 2008, the operating line was increased to $4,000,000. On March 3, 2008, a further letter was issued by RBC creating a new term loan of $250,000. That loan was amended to $500,000, by letter dated April 8, 2008.

[22] Through the Fall of 2008, Mr. Troup was working on Willowbrook’s annual review, which included a financial restructuring plan. There was no formal response from RBC with respect to the restructuring plan.

[23] Mr. Troup did place a telephone call to John Langendoen on December 4, 2008 requesting a meeting at Willowbrook on December 5th. RBC sent a letter dated December 3, 2008, which was circulated at the start of the meeting. The letter began, “Notwithstanding excesses that may have been permitted in the past, your accounts and loans are to continue to operate and repay as agreed within approved limits”. A further letter from RBC dated December 8th setting out its information demands stated that Willowbrook was “in excess of its operating loan limit of $2,750m by $1,029m”.

[24] By the December 5th meeting, Willowbrook was relatively current in terms of its financial obligations to RBC. Willowbrook had repaid the $500,000 term loan approved earlier in the year and had paid the $4,000,000 line of credit down to $3,779,000. All other financial obligations, including mortgages, Visas and equipment leases were paid up and were in good standing. However, requests by Mr. Bain to defer the principal portion of a December 2008 payment of one of the Royfarm mortgages in the amount of approximately $90,000 was refused by Mr. Gordon at RBC.

[25] As noted above, from January 2005 up to and including December 2008, RBC consistently provided Willowbrook with temporary overdraft financing, referred to as Temporary Accommodation Requests (TARs). This interim financing assisted Willowbrook in meeting operating expenses during those months of the year when there were limited sales and expenses being incurred to create inventory for the next selling season. These TARs were a consistent feature of the banking relationship between RBC and Willowbrook, given the cyclical nature of the nursery business.

[26] Up until 2008, the TARs which were created to provide, in effect, short term financing, were repaid or extended in accordance with all the requirements set by RBC. There was never a default of any of the TARs. The TARs were, in effect, used as a supplement to the annual operating line extended by RBC.

[27] Willowbrook takes the position that the conduct of the parties, over the four year history of the relationship, created an “overarching agreement” that RBC would in fact accommodate the cyclical nature of Willowbrook’s business by advancing additional operating funds through the TARs. The amount and duration of each TAR was established after consultation of the parties.

[28] Over the years of their relationship, Mr. Troup, who was “managing” the Willowbrook account continued to arrange credit with RBC to provide additional credit facilities that were required by Willowbrook’s growing and expanding business. These financial requirements were reviewed, amended and renewed on an annual basis in the fall of every year, based on the year-end financial statements of Willowbrook and the submission of cash flow projections and the business plan.

[29] In the late Summer of 2008, a similar process was underway, except that Willowbrook and Mr. Troup were working on a complete restricting of Willowbrook’s credit facilities. To bring this about, he dealt with Mr. and Mrs. Langendoen and Willowbrook’s accountant, Roger Bain. They were of the view that more long term debt financing was required in order to free up operating funds. Willowbrook had real property assets with a market value of more than $6,000,000, yet the mortgage debt related to these assets were less than $3,000,000. Over the years, capital acquisitions and improvements had been funded from profits of the business. However, by late 2008, Willowbrook’s need for operating funds was not being adequately met by the existing line of credit and the TARs arrangement.

[30] In order to address this imbalance, in addition to TARs, Mr. Troup obtained short term inventory loans for Willowbrook. One of these loans was authorized on March 3, 2008. It was increased to $500,000 on May 18 and was repaid by November 2008.

[31] Willowbrook’s fiscal year-end was July 31st. The financial statements for the 2008 fiscal year were completed on October 14, 2008 and were given to Mr. Troup, who was still managing the account for RBC.

[32] Mr. Troup presented his restructuring plan to his superior, Douglas Hickey, on November 21, 2008. It was clear that Willowbrook would need additional operating funds in early December. Regrettably, Mr. Hickey rejected Mr. Troup’s proposal for financial restructuring. As well, Willowbrook’s accounts were sent to Special Loans and Advisory Services. The proposed restructuring was rejected and there was no approval for any increase in Willowbrook’s operating line of credit or the granting of TARs, as there had been in previous years. Mr. Troup was removed from the account and Price Waterhouse Cooper was appointed to prepare a report.

[33] Willowbrook was advised that the interest rates on loans was to increase and additional bank charges were applied to the account. The plaintiff takes the position that Willowbrook should have been advised of RBC’s decision not to continue providing TARs in the long term and that RBC should have been given a reasonable opportunity to find alternative financing or some other solution in a timely fashion.

[34] Willowbrook was offended that its accounts were transferred into Special Loans and Advisory Services. Over the prior 11 months of 2008, Willowbrook had repaid more than $500,000 on the Royfarm mortgages and it also paid down all of the equipment leases. Overall, Willowbrook’s debt obligation to RBC had been substantially reduced.

[35] Apparently Royal Bank takes the position that the reason for rejecting the restructuring proposal was that Willowbrook’s inventory level was too high, thereby depleting operating funds.

[36] In his response to Mr. Troup’s proposal for a restructuring, Mr. Hickey refers to other reasons for rejecting Troup’s proposal. Mr. Hickey’s response states in part:

Now the projections call for improved profitability despite the uncertain economy and the apparent slump in new home construction which is an important driver for sales in this industry. We suspect that the projections may be optimistic in today’s environment.

[37] Mr. Hickey went on to state:

We are not prepared to advance further loans at this time given the issues raised above, and also that there is no realistic assumption that the current situation will improve in the near term (in particular, since this is the slow season for the industry).

[38] The plaintiffs point out that when these steps were taken by RBC to restrict Willowbrook’s access to further financing that the principals of Willowbrook were extremely vulnerable. Jocelyn was totally incapacitated by cancer, indeed dying, and John was unable to respond or cope with RBC’s demands for information, including detailed financial projections. The information requirements imposed by Mr. Gordon of Special Loans and Price Waterhouse Coopers on December 5th and 8th required considerable amounts of time and effort to satisfy. They also involved additional expense, including appraisal costs, accounting fees and fees for Roger Bain. Willowbrook pleads that it was taken by surprise by the approach adopted by RBC. The prior relationship had been a very positive one. Willowbrook pleads that as it entered into this part of its seasonal business cycle it required immediate access to operating funds to permit it to carry on operations. Counsel for the plaintiff submits that Willowbrook was consistently profitable and had a huge asset base.

[39] The transfer of the Willowbrook accounts to “Special Loans” was viewed in a very negative way by the plaintiff. The plaintiff further submits that the management of Willowbrook’s accounts by Mr. Gordon in Toronto was of no assistance to Willowbrook. Mr. Gordon limited further expenses and criticized “any excesses that may have been permitted in the past”. The plaintiff points out that at that time the authorized line of credit was only $1,275,000. This was all happening in December, with the Christmas season approaching and a time of year when customers were not about to buy trees or shrubs from the nursery. The plaintiff has referred to the December 5, 2008 meeting as a “sham”. The plaintiff maintains the meeting was simply used as a platform to announce that Willowbrook was now in the hands of special loans, that Mr. Gordon was now the account manager and that operating funds were being restricted to $1,275,000, plus an overdraft of $125,000. As well, all banking fees and interest rates were being increased significantly and that Price Waterhouse Coopers would be conducting a review of Willowbrook.

[40] By the end of December 2008, Willowbrook had more than $5.1 million dollars in pre-booked orders. Over the next few months it had to ready that product for delivery.

[41] As of December of 2008, Peter Gordon took complete control of the Willowbrook chequebook. No cheques could be issued without his approval. He pointed out that the line of credit was overdrawn by $1,029,000. That overdraft had been permitted by Mr. Troup in the weeks leading up to December 5th and that permission was now being cancelled. Given the approach taken by RBC, Roger Bain, the accountant for Willowbrook, began to take steps with respect to the possibility of alternate financing.

[42] The court has reviewed communication between the RBC and Willowbrook, including Roger Bain’s letter to Peter Gordon of January 12, 2009.

[43] Mr. Bain, on behalf of Willowbrook, requested a cushion of 30 days from RBC in order to arrange alternate financing. Peter Gordon replied granting Willowbrook 60 days to do so. With respect, I disagree with plaintiff’s submission that this “clearly constituted a formal demand for repayment on January 16, 2009”. It was not a formal demand for repayment.

[44] In Mr. Gordon’s email to Roger Bain on January 16, 2009, Mr. Gordon made the following statement:

In light of the company’s comments and opinions (with which we disagree) regarding the former management of the credit prior to referral to special loans, it would now be very difficult to transition the company back to the banking centre even assuming all our concerns were addressed. The bank’s reasoning and decision to move the company to special loans for ongoing management is unchanged.

[45] The plaintiff submits that this comment confirms that RBC was not “genuinely interested in assisting Willowbrook in continuing in business and that it wanted all of its loans repaid”.

[46] Over the next several weeks Mr. Bain worked closely with Christine Wierenga (Van Giest), who had become Jocelyn’s assistant, in order to respond to Peter Gordon’s requests for information as set out in his letter of December 8th. By virtue of diligent efforts at Willowbrook, by the second week in January 2009, Mr. Bain and Ms. Wierenga had provided all the information that Mr. Gordon had requested. While I do not necessarily agree with the plaintiff’s suggestion as to the motivation behind the conduct of RBC, it is clear that RBC was restricting or limiting Willowbrook’s access to financing. When Roger Bain requested Mr. Gordon to defer a $90,000 mortgage payment on one of RBC’s recently renewed mortgages, Mr. Gordon refused the request. What is clear is that Peter Gordon refused to consider transferring Willowbrook out of Special Loans and was reluctant to provide additional operating funds.

[47] In December of 2008, following the December 5th meeting at Willowbrook, Roger Bain first contacted CIBC in St. Catharines to discuss potential financing for Willowbrook. It will be remembered that CIBC was Willowbrook’s previous bank (before the transfer to RBC). Soon thereafter, Roger Bain provided Peter Gordon with a letter from CIBC confirming that it would be providing $7.5 million dollars in financing to Willowbrook. In short order therefore, all of Willowbrook’s financial affairs were transferred from RBC to CIBC.

[48] Reference has been made by counsel to the tragic death of Jocelyn Langendoen. She passed away on January 22, 2009. Reviewing the communications that passed between Jonathon Langendoen and Peter Gordon, I reject the plaintiff’s suggestion that Mr. Gordon and RBC simply, in an unscrupulous way, sought to take advantage of her illness and subsequent death simply to rely upon the “key man” insurance that was then payable upon her death. Peter Gordon’s pressure, which he put on the plaintiff corporation and John Langendoen, may have been somewhat insensitive in all the circumstances, however I conclude that his approach to dealing with the plaintiff corporation was not entirely inappropriate.

[49] He was relying upon the contractual arrangements between them. It is not for this court to assess the wisdom of RBC’s decision in late 2008 with respect to its contractual relationship with Willowbrook. I am mindful of all of the plaintiff’s submissions with respect to the wisdom of RBC’s conduct in late 2008. To some extent, the merits of Willowbrook’s position is put forward in the written submissions of the plaintiff in paragraphs 195 to 204.

[50] The relationship between a banker and the bank’s client is a not a fiduciary relationship. It is a contractual relationship, which simply put requires that both parties must act in good faith. If a lender demands payment from a debtor, reasonable notice must be given of such demand. There is considerable jurisprudence that deals with reasonable notice for a demand for repayment. In the case at bar, I do not accept the plaintiff’s position that the conduct of the defendant bank constituted a demand for repayment. In any event, I conclude that reasonable notice with respect to a change in their financial relationship was indeed given to the plaintiff corporation. The plaintiff corporation requested 30 days to arrange refinancing. The defendant, RBC, immediately allotted 60 days for the plaintiff corporation to make such arrangements. In fact, as it happened, a further reasonable time was granted. I am mindful of all the jurisprudence cited by counsel and conclude that the defendant bank did permit the plaintiff corporation sufficient time to make alternate financial arrangements, which it did.

[51] I reject the plaintiff’s submission that RBC acted in bad faith. One might question the financial wisdom of RBC’s decision to limit the extension of financial relief to Willowbrook, but I cannot conclude that in doing so RBC acted in bad faith. RBC was simply exercising honestly its contractual entitlement. This exercise was not capricious or arbitrary. The duty of good faith and its application to contract law has been well set out in the off cited case of Bhasin v. Hrynew, 2014 SCC 71. The decision of the court was given by Mr. Justice Cromwell. In dealing with the “notion of good faith” at para. 33, Mr. Justice Cromwell stated:

In my view, it is time to take two incremental steps in order to make the common law less unsettled and piecemeal, more coherent and more just. The first step is to acknowledge that good faith contractual performance is a general organizing principle of the common law of contract which underpins and informs the various rules in which the common law, in various situations and types of relationships, recognizes obligations of good faith contractual performance. The second is to recognize, as a further manifestation of this organizing principle of good faith, that there is a common law duty which applies to all contracts to act honestly in the performance of contractual obligations.

[52] Mr. Justice Cromwell goes on to state at para. 65:

The organizing principle of good faith exemplifies the notion that, in carrying out his or her own performance of the contract, a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner. While “appropriate regard” for the other party’s interests will vary depending on the context of the contractual relationship, it does not require acting to serve those interests in all cases. It merely requires that a party not seek to undermine those interests in bad faith. This general principle has strong conceptual differences from the much higher obligations of a fiduciary. Unlike fiduciary duties, good faith performance does not engage duties of loyalty to the other contracting party or a duty to put the interests of the other contracting party first.

[53] Justice Cromwell continued to state at para. 70:

The principle of good faith must be applied in a manner that is consistent with the fundamental commitments of the common law of contract which generally places great weight on the freedom of contracting parties to pursue their individual self-interest. In commerce, a party may sometimes cause loss to another — even intentionally — in the legitimate pursuit of economic self-interest: (citing authority). Doing so is not necessarily contrary to good faith and in some cases has actually been encouraged by the courts on the basis of economic efficiency: (citing further precedent). The development of the principle of good faith must be clear not to veer into a form of ad hoc judicial moralism or “palm treeˮ justice. In particular, the organizing principle of good faith should not be used as a pretext for scrutinizing the motives of contracting parties.

[54] In dealing with the key question before the court, that is whether the court should create a new common law duty under the “broad umbrella” of the organizing principle of good faith performance of contracts, Mr. Justice Cromwell stated at para. 73:

In my view, we should. I would hold that there is a general duty of honesty in contractual performance. This means simply that parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract. This does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirement not to lie or mislead the other party about one’s contractual performance. Recognizing a duty of honest performance flowing directly from the common law organizing principle of good faith is a modest, incremental step. The requirement to act honestly is one of the most widely recognized aspects of the organizing principle of good faith (citing authority). For example, the duty of honesty was a key component of the good faith requirements which have been recognized in relation to termination of employment contracts (citing authority).

[55] Justice Cromwell continued at para. 86:

The duty of honest performance that I propose should not be confused with a duty of disclosure or of fiduciary loyalty. A party to a contract has no general duty to subordinate his or her interest to that of the other party. However, contracting parties must be able to rely on a minimum standard of honesty from their contracting partner in relation to performing the contract as a reassurance that if the contract does not work out, they will have a fair opportunity to protect their interests. That said, a dealership agreement is not a contract of utmost good faith ( uberrimae fidei ) such as an insurance contract, which among other things obliges the parties to disclose material facts: Whiten . But a clear distinction can be drawn between a failure to disclose a material fact, even a firm intention to end the contractual arrangement, and active dishonesty.

[56] Mr. Justice Cromwell then continued at paras. 92 and 93. He stated:

[92] I conclude that at this point in the development of Canadian common law, adding a general duty of honest contractual performance is an appropriate incremental step, recognizing that the implications of the broader, organizing principle of good faith must be allowed to evolve according to the same incremental judicial approach.

[93] A summary of the principles is in order: (1) There is a general organizing principle of good faith that underlies many facets of contract law. (2) In general, the particular implications of the broad principle for particular cases are determined by resorting to the body of doctrine that has developed which gives effect to aspects of that principle in particular types of situations and relationships. (3) It is appropriate to recognize a new common law duty that applies to all contracts as a manifestation of the general organizing principle of good faith: a duty of honest performance, which requires the parties to be honest with each other in relation to the performance of their contractual obligations.

[57] In his written submissions, counsel for the plaintiff quotes from the article by Andrea M. Bolieiro printed in Volume 33 of the Advocates Journal No. 4 at pages 23-29. I accept that analysis. In the case at bar however, I do not accept the plaintiff’s submissions that the defendant RBC acted in bad faith. It simply relied upon the terms of the many contracts entered into between the parties during the course of their relationship. One might question the financial wisdom of the defendant bank’s conduct, but I conclude the bank acted in good faith throughout, consistent with its contractual rights and obligations pursuant to the contracts entered into between the parties.

[58] I now turn directly to the issue of damages claimed by the plaintiff. I am mindful of all of the material submitted by the parties, including written submissions and facta. I am mindful for instance of the defendant bank’s trial factum and the recitation of the issues and the law found at paragraph 101 and following. Paragraph 103 sets out the contractual terms which the parties had agreed to. I have reviewed the correspondence between the parties and this summation is an accurate reproduction of the terms of the agreements which the parties had entered into. I agree with the submissions of the defendant in paragraphs 106 to 136. There is no room for the application of the parole evidence rule in this case. The terms of the contracts entered into between the parties are, in my view, clear and unambiguous. The bank (RBC) acted reasonably, according to the terms of the contracts entered into between the parties. There is no basis in this case for a claim for unjust enrichment.

[59] I first reject the plaintiff’s claim for specific damages set out in paragraph 250 of their written submissions. These claims are all based on expenses that the plaintiff was put to as a result of its decision to move from CIBC to RBC. Given its decision to do so, these expenses were a cost of doing business. The lease charges from RBC for unearned interest were in fact a contractual obligation of the plaintiff, which resulted in the plaintiff acquiring all the property involved.

[60] The plaintiff also claims damages for “loss of goodwill” and for “loss of productivity”. No evidence was called with respect to these claims.

[61] I have no doubt that it took some time for the plaintiff corporation to re-establish its reputation within the community. I can only presume that with the assistance of the CIBC, it has been able to do just that. There is however no basis upon which I can establish damages for these claims.

[62] The same comment applies to the claim for general damages. There is no evidence before the court that the plaintiff has suffered any general damages. I can only presume and wish to believe that its reputation for quality and service over many years has ensured continued success with its former, present and new customers.

[63] When in a situation such as this, a relationship between a banker and client comes to an end, they must both accept the consequences. Failing evidence of bad faith on the part of one of the parties, which does not exist in this case, they must both get on with their business lives.

[64] On the evidence in this case it would appear that the defendant bank, RBC, by its attitude and conduct has lost a valued customer. The evidence suggests that if the bank had taken a different approach, the plaintiff would still be a valued customer contributing to the fortunes of the defendant bank. That is not to be. Life must go on. But the evidence also suggests that the plaintiff corporation will continue to thrive and prosper in the future. I trust that will be so.

[65] I will simply add that the request for punitive damages in this case is completely unfounded. Punitive damages may be awarded in a case involving breach of contract. I need not quote from such cases as Whiten v. Pilot Insurance Company, 2002 SCC 18 or Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130. It is clear that punitive damages are awarded only in exceptional cases for “malicious, oppressive and highhanded” misconduct that “offends the court’s sense of decency”.

[66] Looking at the defendant’s actions in this case, an objective observer may conclude that they were financially unwise. However, at all times the defendant bank acted in accordance with its contractual rights and obligations and in no way can its conduct be viewed as “malicious, oppressive or highhanded”. Counsel for the plaintiff has argued that the conduct of the defendant bank should offend the court’s common sense. If that were so, in no way could the defendant bank’s behaviour offend the court’s sense of decency. The claim for punitive damages is completely without merit and is dismissed.

[67] For the above reasons, I dismiss the plaintiff’s claim for damages against the defendant Royal Bank of Canada.

[68] If counsel cannot agree on costs, they may make brief written submissions to me at my chambers in Kitchener, within 60 days of publication of this judgment. I wish to commend counsel for their thorough preparation of the material in this case and for their assistance to the court.

R. D. Reilly J. Released: August 11, 2016