Court clears TD Bank of damages despite proven loan breach
An earlier summary judgment ruling, upheld on appeal, already found that TD had negligently breached its loan contract with 163 by failing to advance the full amount. That left one question for trial: what damages, if any, flowed from that breach. The Rooneys and their companies sought a combined $8,833,776, covering losses to 163, a related company, 2362378 Ontario Inc. (“236”), personal claims by Matthew and Haley Rooney, and debts owed to other creditors.
Justice Robert Smith found the answer was nothing. The court preferred the evidence of TD’s business valuation expert over the Rooneys’, finding their own expert’s damages estimate relied on an unrealistic 16 percent future profit margin, well above the 2 to 6 percent range the court found typical for restaurants of that kind, and failed to deduct a roughly $500,000 loan 163 had made to a related Kanata restaurant venture called Skirt Steak, which failed within six months and became uncollectible. Once those adjustments were made, the estimated value of 163’s business at the relevant date fell to nil.
The court found that TD’s funding shortfall was not the “effective cause” of the restaurant’s failure to reopen. Instead, it pointed to the fire, the money tied up in the failed Kanata expansion, and insufficient fire insurance proceeds once other creditors were paid. As the decision put it, “163’s damages caused by TD’s breach of contract was nil.”
The judge also dismissed claims that TD committed the tort of deceit over a separate interest-rate reduction on Haley Rooney’s home equity line of credit, and rejected a bid for punitive and exemplary damages, finding no dishonest or high-handed conduct by TD staff. Personal guarantees signed by Matthew Rooney, Haley Rooney, and 236 in support of the loan were upheld and were not discharged by TD’s breach.
TD Bank’s original claim against the defendants succeeded. The court ordered the defendants to repay the outstanding loan balance, the home equity line of credit, and related credit card debts, and granted TD possession of the mortgaged property with the right to sell it under power of sale. The counterclaim against TD was dismissed.
