Assessing “Lender Liability” in Workouts

National Insolvency Review February 2013 Volume 30, No. 1

• ASSESSING “LENDER LIABILITY” IN WORKOUTS • Lee Cassey and Lily Coodin Torys LLP This article addresses some of the main theories (ii) under tort theories, where lenders are alleged by which lenders may be exposed to liability in either to have acted negligently or interfered a workout situation. So-called “lender liability” intentionally with the economic relationships or is not itself a separate cause of action. Rather, it interests of the borrower.1 As we will discuss, is a term of art often used to describe a situation while each of these potential risks of liability in which a lender has been found liable to a bor- has been subject to a relatively considerable rower (or others) for an act or omission of the amount of attention and judicial consideration in lender. Much has been written on the potential the United States, in Canada, fewer examples liabilities faced by secured lenders in the con- exist in the jurisprudence. The jurisprudence text of the enforcement of their security— that does exist, in general, appears to indicate owner/occupier environmental liabilities, suc- that the risks to lenders in a workout situation cessor employer liabilities, liabilities resulting are minimal, provided that a lender is acting qua from improvident realization efforts, etc.—but lender and in accordance with its contractual little commentary in Canada exists on the poten- rights. tial liability risks to lenders in a workout situa- Fiduciary Duty tion where there is an existing lending relationship and some negotiation involving the One major threshold question arising in a work- restructuring of such loan (including forbear- out situation will be whether a lender owes a ance of any rights or remedies) or a proposed fiduciary duty to a borrower. As noted in the 2 transaction by the borrower subject to lender Ontario case of Scavarelli v. Bank of Montreal, consent under the loan agreement. the general rule in Canada is that the relationship between borrower and lender does not give This article seeks to add to the little existing rise to a fiduciary obligation owed by the lender commentary on the subject by discussing certain absent “special circumstances.”3 of the main potential bases of lender liability in a workout situation—namely, (i) where lenders In the recent case of J.R. Investments Ltd. v. 4 are alleged to owe a fiduciary duty to the bor- Moncton Flying Club Estate, the New Bruns- rower and to have breached such duty and wick Queen’s Bench canvassed certain recent

9 National Insolvency Review February 2013 Volume 30, No. 1

case law on the topic of fiduciary duties in the party would act in the former’s best interests context of lending. The court, citing the Ontario with respect to the subject matter at issue. Dis- Court of Appeal in Standard Standard Invest- cretion, influence, vulnerability and trust are ments Ltd. et al. v. Canadian Imperial Bank of factors to be considered.”10 This may arise, for Commerce,5 determined that, “The relationship example, where the lender or its agent provides of banker and customer does not per se give rise financial advice or uses confidential information to a fiduciary relationship … [I]n the absence of of the borrower to the borrower’s detriment.11 special circumstances the general relationship The case law in this area demonstrates the diffi- between the bank and its customer or depositor, culty borrowers have had in trying to show the 6 The court is simply that of debtor and creditor.” existence of a fiduciary duty in the relationship went on to find that, “From my reading of the between lender and borrower and that, even if authorities, it seems clear that the usual relation- shown, there has been an abuse of that relationship between a bank and its customers does not ship within the confines of the contract. In normally create a fiduciary duty. A marked de- Scavarelli, the court held that, “The plaintiff has parture from the norm must occur to create such the onus of demonstrating the existence of a fi- 7 a fiduciary duty.” 12 duciary relationship.” In order to establish the The court went on to cite the Supreme Court of existence of a fiduciary duty, the plaintiff must British Columbia in Waryk v. Bank of Montreal demonstrate that the following four elements are for the notion that, “It is rare in the context of an satisfied: arm’s length commercial transaction that there (i) the advice was provided and was relied is a finding of a fiduciary relationship between a upon, bank and its customers. Parties’ relations are governed by contract in these situations. There (ii) the defendant was aware of the reliance, 8 are no peculiar vulnerabilities.” Further, the (iii) the defendant derived a benefit from the court cited the Ontario Superior Court of Justice transaction, and in Baldwin v. Daubney to reinforce the idea that, (iv) the relationship was one of a confidential “A fiduciary duty arises where a relationship nature.13 between the parties, such as trustee and benefi- ciary, is established in order to give one party Moreover, the court in Scavarelli cited other the responsibility to look out for the best inter- jurisprudence indicating that, “the banks are en- ests of the other. The relationship between a titled to exercise their rights solely in their inter- lender and a borrower is not of that kind. ests.”14 Clearly, the threshold to be met by a Rather, it is a typical commercial relationship in borrower alleging the existence of a fiduciary which the interests of the parties are not the duty on the lender and in demonstrating the nec- same and each party seeks to secure its own in- essary abuse to constitute a breach of the duty is terest and can reasonably believe only that the not easily overcome.15 9 other party is doing the same.” The Ontario Court of Appeal recently consid- The case law has generally found that these ered the issue of lender liability and fiduciary “special circumstances” exist where, “one party duty in the context of a limited partnership in could reasonably have expected that the other the case of Empire Life Insurance Co. v. Krystal

10 National Insolvency Review February 2013 Volume 30, No. 1

Holdings Inc.16 In finding that the lender had not sion making of the borrower and, as such, be breached a fiduciary duty toward the limited exposed to the same liabilities as the borrower partners because no fiduciary duty was owed, in respect of such decision. This has the poten- the court commented on the importance of the tial to, for example, leave the lender responsible contractual nature of the relationship between for tax liabilities or damages to a third party lender and borrower. The court determined that, whose business is affected by the decision. while there could be some duties owed by the The “control doctrine”, as it is often referred to, lender to the limited partners, the existence of a is much more developed under the American contract was a paramount consideration in jurisprudence than under the Canadian jurispru- evaluating the liability of the lender. Specifi- dence.18 Few Canadian courts have addressed cally, the lender would not be found liable be- this particular area of potential liability. In gen- cause it had operated within the confines of eral, under the American jurisprudence, a lender what it promised contractually, which, in this will not be held to exercise control (and thus be case, was to communicate with the general part- subject to liability under this theory of liability) ner and not the limited partners. The court found where the lender is acting only to protect its se- that, “The relationship between [the parties] is a curity interest.19 But certain American courts contractual one. … [T]he contractual nature of have found lenders liable where the protection the relationship cannot be ignored.”17 of security interests is coupled with control over The foregoing jurisprudence shows the factual the borrower. and legal burden a borrower must demonstrate For example, in the 1984 decision of the Texas on breach of fiduciary duty claims against a Court of Appeal in State National Bank of El lender: (i) that a fiduciary duty is owed by such Paso v. Farah Manufacturing Co.,20 the lenders lenders through the existence of a “special cir- to a public company, pursuant the applicable cumstance” or some form of special reliance on loan agreement, were permitted to, among other the lender and (ii) that, contractually, the lender things, prevent certain people from being was not permitted to so act and breached such elected to the board of directors and auctioning duty. off certain assets of the borrower.21 While the The “Control Doctrine” court noted that the lenders were acting in ac- As noted, unless “special circumstances” are cordance with their contractual rights and pro- present (which onus is on the debtor and is tecting their security interests, the lenders were highly fact specific), a lender will not be found found ultimately to have exerted a level of con- to owe a borrower a fiduciary duty. One type of trol over the borrower by essentially installing “special circumstance” of note occurs where a their own management of the business while lender is alleged to be the mind or management leading the borrower’s board of directors to be- of, or to exert operational control over, the bor- lieve that the lenders would accelerate the loan rower. The risk is that, in the context of a deci- and force bankruptcy if unacceptable manage- sion being made by a lender to provide a further ment were appointed. In the end, the lenders advance of funds, for example, the lender will were held liable for having accrued a benefit by be seen to step into the shoes of the borrower, applying pressure to have their own board since the lender can effectively control the deci- members installed, while excluding the others,

11 National Insolvency Review February 2013 Volume 30, No. 1

and for having performed related fraudulent ac- manager/bank.26 The lender was found not to be tivity.22 The borrower was allowed to recover liable. millions of dollars in damages against the In reaching this conclusion, the court described lender. “control” as, “where the lender is able to veto Since the decision in Farah Manufacturing sev- certain management decisions, installing its own eral examples exist in the American jurispru- personnel into the companies’ management, or dence whereby courts have found lenders liable has such stringent security agreements that it is for damages resulting from having taken control able to effectively control the borrower’s busi- of the borrower’s affairs.23 The Canadian juris- ness.”27 The court, in this case, looked to the prudence on the “control doctrine,” by contrast, American jurisprudence for guidance, finding is comprised of many fewer cases. that “control” was one of the heads of liability In Royal Bank of Canada v. Woloszyn,24 the under fiduciary duty. Though no control and no Nova Scotia Supreme Court considered the is- fiduciary duty existed in this case, the court sue of operational control. The court, in discuss- identified certain hallmarks of operational con- ing the American case law on the control trol by a lender over a borrower, which future doctrine, determined that, “courts have held that Canadian courts may seek to adopt, including where a lender, through its own documentation (i) a veto over some managements decisions, and security arrangements, assumes operational (ii) the positioning of the lender’s own per- control of the borrower, the lender also assumes sonnel in the borrower’s management, a fiduciary relationship to the borrower.”25 Thus, the element of control is, in essence, the “special (iii) the equitable ownership of the borrower’s circumstance” and the special reliance on the shares to which voting rights attach, and lender that creates the fiduciary obligation. In (iv) a security agreement so broad that it effec- that case, a borrower met with a manager of a tively allows the lender effective control bank and discussed financing for a new business over the borrower’s business.28 enterprise. The borrower interpreted the man- The court held that, on the facts, the bank did ager as having given the “go ahead” for the en- not owe a fiduciary duty to the borrower and terprise and began writing cheques and the lender was not liable. The court found that, incurring expenses in respect of such enterprise. “absent special circumstances of ‘reliance’, the Importantly, there was no formal loan agree- relationship [between lender and borrower] is ment coming out of the meeting and the money one of a commercial nature, rather than of a was being withdrawn as overdraft on the bor- fiduciary on whom special duties and obliga- rower’s existing account with the bank. When tions rest.”29 the borrower realized that he had never been approved for financing, he brought an action In the case of Silicon Graphics Ltd. v. Can- against the bank (formally, a counterclaim to the ada,30 the Federal Court of Appeal considered bank’s action for repayment of the overdraft) the issue of control in respect of Canadian- based on the failure of the bank to make the ad- controlled private corporations. In examining vances as promised by the manager and, indi- the issue of control in depth, the court found rectly, alleged control of the borrower by the that a lender was not in a position of control

12 National Insolvency Review February 2013 Volume 30, No. 1

with respect to the borrower. This was despite Tort the fact that the founder of the lending com- The above cases demonstrate that the existence pany was a director of the borrowing company of a fiduciary relationship will be entirely fact and that the president, Chief Operating Officer, dependent and rest on facts indicating a special and Chief Executive Officer of the borrower reliance on the lender. Other possible theories of was previously a senior officer of the lending liability for a lender are based in tort law company. Further, the borrower’s product de- through, among other theories, negligence and pended entirely on the use of some of the the intentional tort of unlawful interference with lender’s products. economic relations or interests. In general, li- In considering the issue of control, in light of ability under tort theories appears to be equally Canadian case law on the subject, the Silicon fact dependent as is liability under fiduciary Graphics court determined that, “in order for duty claims. there to be a finding of de facto control, a per- (i) Negligence son or group of persons must have the clear right and ability to effect a significant change For any negligence claim, a threshold issue is in the board of directors or the powers of the whether the lender owes the borrower a duty of board of directors or to influence in a very di- care. In the case of Royal Bank v. Woloszyn, the rect way the shareholders who would otherwise court found that there could be a “special rela- have the ability to elect the board of direc- tionship” between a lender and a borrower, such tors.”31 In Silicon Graphics, despite the above- that the threshold issue of a duty of care is met mentioned elements of control, these indicators (even if no fiduciary relationship is present). The were not sufficient to warrant a finding of con- court held that, “notwithstanding there is not a trol as they did not directly affect the appoint- fiduciary relationship, there may have been such ment or voting of the board. The court found a ‘special relationship’ arising out of their roles that, in that case, “[the lender] simply loaned as banker and borrower as to create a duty of care money to Alias [the borrower] and took steps that could support an action for negligent misrep- to make sure that money was only spent with a resentation.”33 The court went on to cite the case view to protecting its position as a lender.”32 of Selangor United Rubber Estates Ltd. v. Cradock34 for the idea that where implied terms These cases suggest that Canadian courts will require a lender to act with, “reasonable care and likely give special focus to lenders’ rights relat- skill, … if there had been such a failure to act ing to the “mind and management” of the bor- with reasonable care and skill, the result would rower and its board and that the American have been different [a finding of liability].”35 The jurisprudence on elements of control may serve court in Woloszyn found the lender not to have as a guidepost. This is important for lenders to been negligent based on the particular circum- bear in mind in attempting to structure their re- stances of the case. Still, negligence does pose a lationship and dealings with a borrower so as to risk of liability to lenders, depending on the facts minimize risk that the borrower will allege that at hand. Often, these claims in a workout situa- special reliance exists that warrants the imposition are framed as negligent misrepresentations tion of a fiduciary duty on the lender. or negligent misstatements of the lender.36

13 National Insolvency Review February 2013 Volume 30, No. 1

(ii) Intentional Torts: Interference with culties borrowers may face in asserting Economic Relations or Interests intentional interference with economic relations In a workout situation, another potential theory or interests against lenders: the threshold of of liability is based on the intentional tort of in- “unlawful means.” terference with economic relations. This could While the Ontario Court of Appeal, in uphold- be alleged, for example, where a borrower has ing the decision in Alleslev-Krofchak,40 deter- entered into some form of agreement with a mined that “unlawful means” meant actions that third party, with the agreement being condi- are not actionable by the plaintiffs themselves tional upon consent of the lender before it can and that are directed at a third party, the more be completed and before the lender decides not recent Ontario Court of Appeal decision in to provide such consent. A finding of unlawful Barber v. Vrozos41 adopted an interpretation of interference with economic interests requires “unlawful means” as actions that the defendant that three elements be satisfied: is “not at liberty to commit.”42 Under either test of “unlawful means,” the difficulty for the bor- (i) the defendant intended to injure rower will be to demonstrate that the lender is the plaintiff; liable, for example, in refusing to provide con- (ii) the defendant interfered with the business sent where the loan agreement provides that the or livelihood of the plaintiff by illegal or lender can, in its sole discretion, decide whether unlawful means; and to provide such consent.43 (iii) as a result of the interference, the plaintiff The requirement of some sort of malice or suffered economic loss.37 unlawful means suggests a very high bar for sat- In general, it is often difficult for a borrower to isfying the elements of the tort, since, presuma- establish the presence of these three elements if bly, acting in accordance with the rights the lender is acting in accordance with its con- provided under the loan agreement should not tractual rights because of the requirement of an lead to unlawful or malicious activity absent unlawful act. some inherently unlawful or illegal provision sought to be relied upon by the lender. In the case of Thermo King Corp. v. Provincial Bank of Canada et al,38 the Ontario Court of Deepening Insolvency Appeal held that a bank had intentionally in- One further ground of potential liability for duced a breach of contract between a corpora- lenders should be noted. In the United States, tion and a supplier and therefore had to pay creditors have, at times, tried to assert claims damages to the supplier. In that case, the court against lenders for “deepening insolvency”; that found that the Bank intended to interfere with is, for expanding corporate debt and prolonging the relationship between Hamilton and Thermo the life of the corporation and, thus, the negative King, making out a key element of unlawful in- impact of the insolvency process on the bor- terference; however, the court also found that, rower and its stakeholders. This risks happening “If the Bank’s action had been lawful as the when, for example, a previously unsecured learned trial judge found, then it would have lender advances further funds or credit to a constituted reasonable justification for its con- troubled company, on a secured basis, soon be- duct.”39 This highlights one of the major diffi- fore an insolvency event. In that case, there is a

14 National Insolvency Review February 2013 Volume 30, No. 1

risk to lenders of having the transaction set aside on the lenders to support any fiduciary duty on the basis of fraudulent conveyance or prefer- claims against a lender, and claims in negli- ence laws; however, the other risk is that, if the gence will need to demonstrate that the lender borrower then becomes insolvent, the unsecured has not acted with reasonable care and skill creditors are in a worse position as a result of (which will be difficult if the lender is acting in the passage of time allowed by the lender’s fur- full accordance with its contractual rights). ther advance of credit and the imposition of new Claims in intentional tort will have to demon- secured debt. strate some unlawful conduct, which will often In the United States, this theory has not been pose difficulties for borrowers, again, if the uniformly accepted and it is unclear whether, if lender is acting in accordance with its contrac- anything, it is a separate cause of action or sim- tual rights and in the interest of protecting those ply a means to quantify damages.44 Jassmine rights. As such, the facts of the particular Girgis, in “Deepening Insolvency in Canada?” lender-borrower relationship and of the loan in the McGill Law Journal, comments that the agreement will be critical in assessing exposure inconsistent treatment of the doctrine in the to potential liability. Lenders should bear this in United States has raised questions as to its ap- mind not only in the workout stage but in draft- plicability in Canada. Girgis suggests that the ing the loan agreement itself. doctrine is unnecessary in Canada, since the [Editor’s note: Lee Cassey and Lily Coodin are same benefits of a successful claim could be both associates in the Restructuring and Insol- achieved under the oppression remedy.45 While vency Group at Torys LLP.] she finds that, “deepening insolvency is on the 1 This article is not intended to be an exhaustive discus- 46 radar in Canada,” she concludes that further sion of all potential causes of action or theories of liabilities that lenders may face in a workout situation or study, “will necessarily lead to the conclusion otherwise. 2 [2004] O.J. No. 109 (Ont. Sup. Ct.) [Scavarelli]. that importing the deepening insolvency doc- 3 47 Ibid. See also Thermo King Corp. v. Provincial Bank of trine into Canada is not necessary.” Still, it Canada et al., [1981] O.J. No. 3136 (Ont. C.A.) and should be noted that Girgis considers the doc- Foley v. Hill and others, (1848) 9 ER 1002 (U.K. H.L.). 4 [2011] N.B.J. No. 303 (N.B.Q.B.–T.D.) trine of deepening insolvency primarily in refer- [J.R. Investments]. 5 [1985] O.J. No. 2668 (Ont. C.A.) ence to the liability of directors and [Standard Investments]. corporations, both governed by corporate law, 6 J.R. Investments at para. 19 (citing Standard Investments at para. 60). and not in respect of lenders such as banks. 7 Ibid. at para. 22. 8 Ibid. at para. 22 (citing Waryk v. Bank of Montreal, Conclusion [1992] S.C.C.A. No. 41 (B.C.S.C.)). 9 Ibid. at para. 22 (citing Baldwin v. Daubney, In the context of heated negotiations in a loan [2005] O.J. No. 5330 (Ont. S.C.J.) at para. 66). 10 Ibid. at para. 23 (citing Bank of Montreal v. Witkin, workout situation or where a debtor has re- [2005] O.J. No. 3221 (Ont. Sup.Ct.) at para. 60). 11 quested a lender’s consent to a proposed trans- Royal Bank of Canada v. Achieve Medical Inc., [2008] O.J. No. 705 (Ont. Sup. Ct.). action, lenders may find themselves in a 12 Scavarelli at para. 36. 13 Ibid. at para. 37. situation in which they will have to assess po- 14 Ibid. at para. 39. tential liability risks associated with their deci- 15 In the United States, as in Canada, a lender-borrower relationship is not typically characterized as a fiduciary sions. In this exercise, assessment of the facts is relationship. It could be characterized as such, once paramount. Borrowers will have the onus of again, where there is an element of confidentiality in the context of a lending relationship (see In re W.T. demonstrating the existence of special reliance Grant Co., 699 F.2d 599 (2d Cir.), cert denied, 104 S.

15 National Insolvency Review February 2013 Volume 30, No. 1

Ct. 89 (1983)), as long as other factors are also satis- which the creditor had a security interest in all the as- fied. And in both the United States and Canada, de- sets of the borrower company and in which certain in- monstrating liability of a lender based on a fiduciary dicators of control were present (Fancy v. Minister of relationship—if one can be established—requires more National Revenue–M.N.R., [1988] T.C.J. No. 810 than simply a confidential relationship; there must be (T.C.C.), cited in Worrell v. R., [2000] F.C.J. No. 1730 an abuse of that confidence by the lender. For exam- (F.C.A.) at paras. 45-46). This may be because the ple, in the American case of Hoffman v. Lincoln analysis of control was undertaken for the purposes of National Bank & Trust Co. (636 N.E.2d at 188), the taxation and not lender liability. plaintiff borrower convinced the court that a confiden- 29 Woloszyn at para. 49. tial relationship existed between lender and borrower, 30 [2002] F.C.J. No. 922 (F.C.A.) [Silicon Graphics]. due to the unsophistication of the borrower, the role of 31 Ibid. at para. 67. the lender as an advice giver, and the lender’s know- 32 Ibid. at para. 68. ledge of the financial position of the borrower in giving 33 Royal Bank at para. 68. advice. Still, the court found that the borrower could 34 [1968] 2 All E.R. 1073 (Eng. Ch. Div.). not succeed, since they had not demonstrated that 35 Royal Bank at para. 70. there was abuse of that confidential relationship by the 36 In the case of V.K. Mason Construction Ltd. v. Bank lender. Even where a loan agent did use confidential of Nova Scotia, [1985] S.C.J. No. 12 (S.C.C.), the information to derive a benefit in the case of Groob et Supreme Court of Canada considered negligent mi- al. v. KeyBank et al., 843 N.E.2d 1170 (Ohio 2006) at srepresentation in the context of lending. The court para. 1, the prospective lender was not found to be lia- found (at para. 23) that, in order to demonstrate liabili- ble. In that case, a bank employee used confidential in- ty for negligent misrepresentation, four elements must formation of a prospective borrower regarding the sale be satisfied: (i) there must be an untrue statement; of a company to gain a personal advantage. The court (ii) the statement must have been made negligently; found (at para. 25) that, “[a]ppellees confuse the duty (iii) there must be a special relationship giving rise to a of confidentiality with fiduciary duty.” The court found duty of care; and (iv) there must be reliance, and the (at para. 26) that more was required to establish a fi- reliance must have been foreseeable. duciary duty—namely, “a special repose or trust.” 37 Alleslev-Krofchak v. Valcom Ltd., [2009] O.J. No. 2469 16 [2010] O.J. No. 50 (Ont. C.A.). (Ont. Sup. Ct.) at para. 315. For a discussion regarding 17 Ibid. at para. 8. these requirements, see para. 316. 18 In the case of Jersey Shore State Bank v. United 38 [1981] O.J. No. 3136 (Ont. C.A.). States, 479 U.S. 782 (1987), the court, in relation to a 39 Ibid. at para. 42. lender’s potential liability for unpaid taxes, found (at 40 [2010] O.J. No. 3548 (Ont. C.A.). p. 479) that, “In some instances, a person other than 41 [2010] O.J. No. 3697 (Ont. C.A.). the employer, such as a lender, may … be personally 42 Ibid. at para. 58. liable if the employee’s Social Security and income 43 This is also true in the United States where courts taxes are not withheld,” and, in that case, the lender, a have commented on the primacy of contractual terms. Bank, was held liable. In the case of Continental Bank, N.A. v. Everett, 964 19 Re Letterman Bros. Energy Litig., 799 F.2d 967 (5th F.2d 701 (7th Cir.) (1992), the Court of Appeals for the Cir. 1986). Seventh Circuit did not hold the lender liable in the 20 678 S.W.2d 661 (Tex. Ct. App. 1984). context of a bankruptcy on the grounds that the ac- 21 Ibid. at pp. 13–14. tions of the lender were allowed by the contract when 22 Ibid. at pp. 28 and 32. the lender violated a duty of good faith. The lender was 23 See, for example, Lease and Rental Management accused of having undersecured its loan to the bor- Corp. v. Arrowhead Central Credit Union, 24 Cal. Rptr. rower, leaving third-party guarantors exposed. In find- 3d 483, 487 (Ct. App. 2005). See, also, Central States ing for the lender on this issue, the court determined Stamping Company v. Terminal Equipment Company (at para. 9) that, “[i]n the end the parties’ rights are Inc., 727 F.2d 1405 (6th Cir. 1984), and Melamed v. fixed by their contracts.” Lake County Nat’l Bank, 727 F.2d 1399 (6th Cir. 1984). 44 Jassmine Girgis, “Deepening Insolvency in Canada?,” In the latter two cases, third parties were allowed to re- McGill L.J. 53 (2008): 167. cover against the lender for losses and damages 45 Ibid. at p. 171. caused to the borrower. It should also be noted that 46 Ibid. at p. 172. some cases have not followed Farah. In Ann Gavin, 47 Ibid. at p. 197. Paul Gavin, Famm Steel Inc., and Austin Realty, Ltd. v. Sovereign Bank, 2008 WL 2622839 (D.Mass.) (at p. 4), the court, in analyzing lender liability, determined that the actions of the lender did not rise to the level of control shown in Farah. This was also the case in DT Apartment Group, LP, et al. v. CWCapital, LLC, et al., 2012 WL 6693192 (N.D. Tex.) at p. 13. 24 [1998] N.S.J. No. 407 (N.S.S.C.) [Royal Bank]. 25 Ibid. at para. 48. 26 Ibid. at paras. 7 and 48. 27 Ibid. at para.48. 28 It should be noted that the Federal Court of Appeal did not, however, find operational control in a case in